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United States v. Burke

January 23, 2009


The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge


This matter is before the court on defendant James D. Burke's ("Burke" or "defendant") motion to suppress over 28 boxes of evidence taken during the search of a Las Vegas residence and nearby storage facility on February 19, 2003. Defendant also moves to dismiss the indictment on the basis that the government allegedly lost or destroyed exculpatory evidence taken during the search. A three-day evidentiary hearing was held in August 2008. Thereafter, the court requested supplemental briefing. Having reviewed the file herein and heard the testimony of witnesses and arguments of counsel, the court DENIES defendant's motion to suppress and defendant's motion to dismiss.


Defendant is charged in the indictment with 33 felony counts, including bankruptcy fraud and money laundering. (Indictment [Docket #6], filed Sept. 8, 2005.) Defendant has pled not guilty to all of these charges.

On February 14, 2002, Truck-A-Way ("TAW"), a corporation controlled by defendant James Burke, commenced a voluntary Chapter 11 bankruptcy proceeding in the Eastern District of California. On March 6, 2002, the Bankruptcy Court issued an order to show cause why the petition should not be dismissed for failure to file the required documents. Subsequently, on May 1, 2002, the TAW bankruptcy proceeding was converted to a Chapter 7 bankruptcy proceeding. On June 13, 2002, a creditor filed a petition for involuntary bankruptcy against James Burke individually. The court granted the petition on January 7, 2003.

In June 2003, James and his wife, Linda Burke, moved out of their home in Vacaville, California at 230 Buck Avenue. (Tr. 3:10; Govt. Ex. 4.) Linda Burke and her two children moved to a residence in Las Vegas, Nevada at 1008 Venetian Hills (the "Las Vegas residence" or the "residence"). (Tr. 3:10; Govt. Ex. 1.) Linda Burke testified that at the time of the move to Las Vegas, she informed defendant that he was not welcome at the residence until he cleared up the legal problems relating to the TAW and his individual bankruptcies. (Tr. 3:10.)

Throughout the bankruptcy proceedings, there were numerous motions filed and orders issued regarding the turnover of documents relating to both bankruptcy proceedings. In November 2002, upon motion of the bankruptcy trustee, multiple orders were entered against the debtor requiring the accounting and turnover of all books and records, as well as permitting the sale of personal property of the bankruptcy estate. These orders were followed by an order from the court filed on January 17, 2003, directing the defendant to file schedules, a statement of financial affairs, and other documents relevant to the bankruptcy.*fn2

Subsequently, on February 19, 2003, J. Russell Cunningham*fn3 ("Cunningham"), counsel for the trustee in the TAW bankruptcy proceeding, filed an "Ex Parte Application for Order Authorizing the Immediate Entry, Search and Seizure of Property" ("the ex parte application") in the bankruptcy court.*fn4 The proposed order submitted by Cunningham purportedly authorized the search and seizure of property allegedly belonging to the bankruptcy estate at the Las Vegas residence, a residence in Palm Desert, California, and unspecified storage lockers. In re. Truck-A-Way, 300 B.R. 31, 33 (E.D. Cal. 2003). According to Cunningham, the ex parte application was necessary because his past experience indicated that James Burke was likely to defy any court order by concealing assets and records belonging to the bankruptcy estate. See id. The bankruptcy court granted the ex parte application without notice and signed Cunningham's proposed "Order Authorizing the Immediate Entry, Search and Seizure of Property" ("the order") without alteration. Id. The order allowed the trustees for the James Burke and TAW bankruptcy estates, along with "their designated professionals," to "[i]mmediately enter" James Burke's residences in Las Vegas and Palm Desert and "[a]ny storage unit reflected in documents" at those locations, "picking or re-keying the door locks if necessary." It also authorized searches of the premises, removal of items that were property of the Burke or TAW bankruptcy estates, and searches of "the persons and personal effects . . . of any person at the premises or who arrives at the premises while the search of the premises is being conducted." Id.

On the same day that the bankruptcy court issued the order, Cunningham flew to Las Vegas to lead the search of the Las Vegas residence. In re. Truck-A-Way, 300 B.R. at 33. Cunningham arrived at the Las Vegas residence to conduct the search personally, along with the trustee for the Burke estate, Thomas Aceituno ("Aceituno"), and two armed deputy U.S. Marshals. Id. Pat Lyon ("Lyon"), counsel for Aceituno as trustee of the Burke estate, arrived later. (Tr. 4:152.) Cunningham, Aceituno, and Lyon seized a computer and paper records from the second floor loft/office area and boxes from the garage and office area. (Tr. 4:152-54.) They also seized keys for a rented storage facility that were located in the kitchen. (Tr. 4:153.) The computer and other materials seized were placed in their vehicles. (Tr. 4:154.)

After searching the residence, Cunningham, Aceituno, and Lyon immediately drove to the storage facility located about a mile from the house. (Tr. 4:157.) They discovered boxes that contained business records relating to TAW. (Id.) They seized the boxes and stored them in their vehicles overnight. (Id.; Tr. 4:162.)

On February 20, 2003, Aceituno had a copy made of the hard drive from the computer seized at the residence. (Tr. 4:166.) Cunningham, Aceituno, and Lyon then shipped the boxes seized via Federal Express from Las Vegas to Cunningham's office in Sacramento, California. (Tr. 4:172-73.) As a result, Cunningham continued to retain the documents and stored them in his office.*fn5

(Tr. 4:174; 5:14.) Cunningham subsequently turned over the seized boxes and documents to the United States Trustee on or about September 30, 2003. (Tr. 5:27, 31.) Jason Lamb, an agent for the Internal Revenue Service, Criminal Division, took possession of the boxes. (Tr. 6:94-95.) The boxes were stored in the evidence warehouse at the Internal Revenue Service Office. (Tr. 6:95.)

On July 2, 2007, defendant filed a motion to dismiss the indictment on the basis that the government destroyed exculpatory evidence and joined a motion filed by co-defendant Linda Burke to suppress all evidence taken during the February 19, 2003 search. On March 10, 2008, during a status hearing on the pending motions in the case, the court asked counsel for the defendant to address the issue of standing through the filing of a supplemental declaration. On April 14, 2008, Linda Burke pled guilty to a violation of 31 U.S.C. § 5324(a)(3), Structuring Financial Transactions. One week later, the defendant filed a supplemental declaration addressing his interest in the properties searched on February 19, 2003.

Between Friday, August 22, 2008, and Wednesday, August 27, 2008, the Court heard three days of testimony on the motions filed in this case. At the conclusion of the hearing, the Court asked the parties to submit further briefing on the issue of standing and on defendant's motion to dismiss in light of the testimony given.


A. Motion to Suppress

Defendant moves to suppress the evidence seized during the search executed on February 19, 2003. The government asserts that defendant James Burke cannot object to the search because he lacks a legitimate expectation of privacy in the Las Vegas residence and storage locker that were searched and in the particular items seized during that search.

It is well establish that remedies for violations of constitutional rights are only "afforded to a person 'who belongs to the class for whose sake the constitutional protection is given.'" United States v. Salvucci, 448 U.S. 83, 86 (1980) (quoting Hatch v. Reardon, 204 U.S. 152, 160 (1907)). Specifically, "Fourth Amendment rights are personal rights which, like some other constitutional rights, may not be vicariously asserted." Rakas v. Illinois, 439 U.S. 128, 133 (1979) (quoting Alderman v. United States, 394 U.S. 165, 174 (1969)); see Katz v. United States, 389 U.S. 347, 351 (1967) ("[T]he Fourth Amendment protects people, not places."). Therefore, the exclusionary rule, which allows the suppression of evidence obtained where a party's constitutional rights have been violated, may only be asserted by a person whose rights have been violated; "[a] person who is aggrieved by an illegal search and seizure only through the introduction of damaging evidence secured by a search of a third person's premises or property has not had any of his Fourth Amendment rights infringed." Rakas, 439 U.S. at 134. Rather, a disputed search and seizure must have infringed upon an interest of the defendant "which the Fourth Amendment was designed to protect." Id. at 140. The Court has made clear that, in this context, the Fourth Amendment protects against government intrusion in those places where a person has a legitimate expectation of privacy. Id. at 143.

To demonstrate a legitimate expectation of privacy that gives rise to Fourth Amendment protections, the defendant must establish that (1) he manifested a subjective expectation of privacy in the object of the challenged search; and (2) society is prepared to recognize that expectation as legitimate.*fn6

California v. Ciraolo, 476 U.S. 207, 211 (1986); United States v. Shryock, 342 F.3d 948, 978 (9th Cir. 2003); United States v. Nerber, 222 F.3d 597, 599 (9th Cir. 2000). "The defendant has the burden of establishing, under the totality of the circumstances, the search or seizure violated his legitimate expectation of privacy in a particular place." United States v. Davis, 932 F.2d 752, 756 (1991) (citing Rawlings v. Kentucky, 448 U.S. 98, 104-05 (1980)).

1. Search of the Residence

a. Subjective Expectation of Privacy

After a review of the credible evidence presented by the parties, the court finds that defendant has not borne his burden of demonstrating that he had an actual, subjective expectation of privacy in the Las Vegas residence searched, and more particularly, in the boxes and computer seized from the residence and sought to be suppressed by this motion.

The determination of whether a defendant has a subjective expectation of privacy in a particular place may be based upon statements made by the defendant, Rakas, 448 U.S. at 105, as well as his actions, United States v. Haydel, 649 F.2d 1152, 1155 (5th Cir. 1981). Where a defendant unequivocally disclaims ownership of the place searched, he gives up any expectation of privacy. United States v. Decoud, 456 F.3d 996, 1007 (9th Cir. 2006) (citing Abel v. United States, 362 U.S. 217, 241 (1960) (holding that one who has voluntarily abandoned property cannot subsequently complain about its search and seizure); United States v. Nordling, 804 F.2d 1466, 1469-70 (9th Cir. 1986) (stating that a defendant relinquishes any expectation of privacy after disclaiming interest in the property); United States v. Cella, 568 F.2d 1266, 1283 (9th Cir. 1977) (explaining that denying ownership of property when questioned constitutes abandonment of that property)).

In this case, the credible evidence demonstrates that until the filing of this motion, defendant James Burke consistently denied interest in the residence searched and in the property within the residence. Defendant admitted that at the time of search he told Aceituno that he didn't live at the house. (Tr. 1:41:19-21). A letter handwritten by defendant, dated February 19, 2003, provides:

Linda called -- trustee named Aceituno there & Police, demanding to search the house -- I asked for what -- she said records or something. I told her that everything there is yours & kids personal property and your business interest records -- he shouldn't even be there.

I asked her to put Aceituno on the phone. Aceituno answered. -- I asked him what he was doing there -- he said "I'm here to search your home for anything that belongs to your or Truck-A-Way's estate." I told him I don't live there -- he said "Yeah, that's what your wife said." I told him that any records in the house is a property of Linda & kids & their business interest records. . . . Linda confirmed she told him I no longer lived there & everything in the house was hers/kids. . . . Linda is very upset -- doesn't want anyone in her house searching for ??? (Govt. Ex. 20; Tr. 1:43-45.) Thus, in addition to statements made verbally to Aceituno, defendant explicitly stated in the foregoing memorialization he drafted subsequent to the search that he did not live at the residence, that the residence was Linda's home, and that everything in the house was Linda's and children's personal property.

Moreover, prior to the search, defendant disavowed ownership in the boxes stored in the garage and the house. Linda Burke testified that James Burke specifically told her that the boxes at issue "are yours and the kids. These are for your interest solely." (Tr. 3:24.)

Defendant's disavowal of residency and ownership interest in the property was also confirmed in court filings made subsequent to the search. Approximately ten months after the search, Linda Burke retained an attorney for herself and her two children regarding the search. (Tr. 3:36.) Defendant was present at the initial meeting with Linda Burke and the attorney, and he provided the attorney with the handwritten document he had drafted subsequent to the search. (Tr. 3:37.) Defendant is listed as a plaintiff on the complaint filed in the United States District Court for the District of Nevada*fn7 and in the subsequent filings made in opposition to motions filed by the defendants in the lawsuit. (Exs. 2-4 to Govt.'s Supp. Briefing Re. Standing ("Supp. Standing") [Docket # 125], filed Apr. 30, 2008.)*fn8 These filings represent that James Burke was residing in California, not Nevada, and that he did not own the residence where Linda Burke and the children were living. (Ex. 2 to Supp. Standing at 3; Ex. 3 to Supp. Standing at 3; Ex 4. to Supp. Standing at 2.) The filings also represent that James Burke "was not a resident of Nevada, nor did he own any real property in Nevada, and in particular did not own or have an ownership interest in the property located at 1008 Venetian Hills Lane in Las Vegas, Nevada." (Ex. 3 to Supp. Standing at 3.) Moreover, the filings made on behalf of defendant specifically provided that the residence was not "in any way owned, controlled or occupied by JIM BURKE." (Id.)

With respect to the computer seized during the search, the computer was located in the second floor office-area loft. (Tr. 3:22-23; Govt. Ex. 19.) There were no doors or other means to close off the space. (Tr. 3:23.) Linda Burke purchased the computer. (Tr. 3:25.) It did not require a password to log on, and both Linda Burke and her daughter had full access to everything on the computer. (Tr. 3:25-26.) Furthermore, defendant had his own lap top that he brought when he came to visit. (Tr. 3:26.) Beyond defendant's unequivocal denial of ownership in the house and the property within the house, defendant failed to evince any conduct that demonstrates an expectation of privacy in the computer; rather, the evidence demonstrates that anyone who had access to the computer also had full access to all its contents.

In light of the foregoing evidence, the court finds that defendant James Burke did not have a subjective expectation of privacy in the residence or in the property seized at the residence. Prior to the search, at the time of the search, and months after the search, defendant expressly denied living at the residence and having any ownership interest in the residence or in the boxes stored in the garage and the house. His explicit statements and conduct relinquished any expectation of privacy in the place searched and the property seized. His contradictory and self-serving testimony made years after the search during the course of the criminal prosecution is not credible. As such, the court could deny defendant's motion to suppress on this basis alone. See Decoud, 456 F.3d at 1007; United States v. ...

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