The opinion of the court was delivered by: Robert H. Whaley United States District Judge
ORDER GRANTING, IN PART, AND DENYING, IN PART, DEFENDANT'S MOTION TO SUPPRESS EVIDENCE AND FOR RETURN OF PROPERTY; DENYING MOTION TO INSPECT GRAND JURY MINUTES; CONTINUING TRIAL
A pretrial conference was held on January 9, 2009, in Los Angeles, California. Defendant was present and represented by Frank Sanes, Jr. The Government was represented by Wendy Wu. Before the Court was Defendant's Motion to Suppress Evidence and for Return of Property (Ct. Rec. 27) and Motion for Inspection of Grand Jury Minutes (Ct. Rec. 28).
At the hearing, Defendant did not present any direct testimony. Defendant did not take the stand. Rather, Defendant relied on the affidavits and declarations that were submitted with his briefing. Likewise, the Government did not present any direct testimony.
On April 18, 2006, based on FBI Special Agent Todd Munoz's Affidavit, the Honorable Ralph F. Zarefsky, United States Magistrate Judge, issued a search warrant for AG Solutions' premises in Los Angeles, California, which is also Defendant's residence.
The Affidavit was forty-five pages and it contained a detailed explanation of the licensing practices of Microsoft and provided specific examples of conduct that Agent Munoz alleged were criminal activity on the part of Defendant and his company, AG Solutions. Specifically, the Affidavit cited:
1. The Kevin Barnes investigation. The Denver FBI office executed a search warrant on Kevin Barnes, who was suspected of selling unlicensed software. The seized software was tested and found to be counterfeit. Kevin Barnes purchased software for purposes of resale from AG Solutions beginning in 2003.
2. The Justin Harrison investigation. The Atlanta FBI office was investigating Justin Harrison, whom they suspected was selling stand alone Microsoft Certificate of Authenticity (COA). Agents executed a search warrant and 600 COA labels were found. Agents obtained chat logs between Harrison and Defendant, which the Affiant interpreted to indicate that Defendant was engaged in criminal activity. It was revealed in one of these online conversations that Defendant owned a replica silver Lamborghini Diablo. Defendant and Harrison also talked about removing the paint/labeling from the software.
3. CS-2 contacted Defendant to discuss the procurement and distribution of unauthorized Microsoft product activation key codes and Microsoft NFR (Not For Retail) software products.
4. UC Agent placed an online order on the web site operated by AG Solutions and Defendant for Microsoft Windows XP Professional Original Equipment Manufacturer (OEM), which is software specifically licensed to computer hardware manufacturers, such as Dell Corporation, for distribution with the sale of new computer hardware. This type of software is not licensed for sale without a new computer as a stand alone or unbundled software product.
5. UC placed online order with "www.abovegroundsolutions.com" (Defendant's new company) for one piece of Microsoft SQL Server 2000 Standard Edition Full Retail software with 25 CAL licenses. The software that was shipped was a "Not For Resale" product and had a non-Microsoft label attached that stated the product "includes 25 CD integrated SQL 2000" Licenses, notwithstanding the fact that the website described the product as a "Full Retail Version" and the image presented was a full retail box package. There were no COA with the software.
6. Microsoft does not distribute SQL Server 2000 products with integrated Client Access Licenses. Instead, a genuine Microsoft produce sold with a CAL would have a separate paper document license produced by Microsoft.
7. FBI undertook Operation Digital Marauder that targeted members of an extensive criminal enterprise involved in the manufacture and distribution of counterfeit computer software products. The investigation yielded $87 million in counterfeit software and access to CS-1, who was the primary target of the investigation. CS-1 confirmed that AG Solutions was one of the CS-1 customers and verified that AG Solutions purchased counterfeit software products. CS-1 is well-known in the counterfeit community and has many contacts.
On April 19, 2006, at approximately 6:00 a.m., FBI agents executed the search warrant. The agents knocked on the front door and announced that FBI agents were seeking entry into the premises pursuant to a search warrant. Three to four such "knock and announces" were conducted. The agents sought to open the door with a key obtained from the security guard of the apartment building. The key failed to open the door. After one to one and a half minutes passed after the first knock and announce, the agents breached the door and gained entry into the apartment with their guns drawn.
The agents were dressed in jackets, bullet proof vests, and caps that clearly identified them as FBI agents or police. Defendant estimates there were about a dozen individuals, including Microsoft officials.
As the agents entered the apartment, they encountered Defendant walking down the hallway towards the front door. They told him they were executing a search warrant. The agents handcuffed Defendant and searched his waistband. Defendant was then taken outside while the agents conducted a protective sweep of the apartment. While Defendant was waiting outside, the agents told him that they were not arresting him that day. After the protective sweep was complete, Defendant was led back into the apartment, where the agents removed the handcuffs. They told Defendant he was not under arrest and that he could leave at any time. Agents told Defendant that they would like to speak with him, but that he was not required to speak with them.
Defendant indicates that after he was returned to the apartment, there were at least two FBI agents who were guarding him at all times. He was taken to a back room in his apartment.
During the questioning, Defendant admitted that he had two replica Lamborghinis, his business was the sole source of his income, and he had grossed about $3,000,000 over the last two and a half years. An agent demanded that Defendant provide him with the keys to the safe, to which Defendant complied. In the safe, the agent located personal papers and $74,000 in cash. Defendant also provided details regarding the transactions with the United States Marine Corp.
On May 12, 2008, Agent Munoz, along with four or five other FBI agents, arrested Defendant pursuant to an arrest warrant. The agents against breached the door to gain entry to Defendant's residence.
1. Defendant's Motion to Suppress Evidence and for Return of Property
Defendant is seeking both the suppression of the evidence seized during the execution of a federal search warrant and the return of the property that was seized.
Defendant argues that the evidence seized during the execution of a search warrant should be suppressed for the following reasons: (1) the warrant was issued without probable cause; (2) the officers violated 18 U.S.C. § 3109 when they entered his residence by smashing down the door and entering at gun point; (3) Defendant was questioned without being advised of his constitutional rights; (4) Defendant was forced to provide keys to a locked safe, from which the officers opened up and seized money; (5) the FBI officers broke open the lock to the garage containing two replica automobiles and seized two vehicles; and (6) the search and seizure of his property was the product of a conspiracy between the Government and Microsoft, in violation of 42 U.S.C. § 1985.
As a general rule, searches and seizures violate the Fourth Amendment unless they are based on probable cause and executed pursuant to a valid search warrant. United States v. Delgado, 545 F.3d 1195, 1201 (9th Cir. 2008). Probable cause exists when, under totality of the circumstances, there is fair probability that contraband or evidence of crime will be found in particular place. United States v. Davis, 530 F.3d 1069, 1084 (9th Cir. 2008). "When a court is considering whether an informant's tip is sufficient to support a finding of probable cause or reasonable suspicion, the court must employ a 'totality-of-the-circumstances approach' that takes into consideration the informant's 'veracity' or 'reliability' and his 'basis of knowledge.'" United States v. Rowland, 464 F.3d 899, 907 (9th Cir. 2006) (citing Illinois v. Gates, 462 U.S. 213, 238 (1983)).
The Court finds there was probable cause to issue the warrant. The informants are reliable and the information they provided was based on their personal knowledge. The warrant provided sufficient evidence for the issuing court to conclude that AG Solutions was procuring and distributing counterfeit software and that the software would be located at the residence/business.
B. 18 U.S.C. § 3109 and Knock and Announce Rule
Defendant argues that the officers violated 18 U.S.C. § 3109 and the knock and announce rule when they ...