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United States v. Mohammad Reza Nazemzadeh

February 11, 2013

UNITED STATES,
PLAINTIFF,
v.
MOHAMMAD REZA NAZEMZADEH,
DEFENDANT.



The opinion of the court was delivered by: M. James Lorenz United States District Court Judge

ORDER DENYING MOTIONS TO SUPPRESS EVIDENCE AND TO SUPPRESS STATEMENTS [Doc. 51.]

Defendant Mohammad Reza Nazemzadeh ("Defendant" or "Nazemzadeh") was charged via indictment with Obstruction of Justice, in violation of 18 U.S.C. § 1512(b)(3). Later, on October 18, 2012, a grand jury returned a superceding indictment adding the additional charges of Conspiracy to Export to Embargoed County, in violation of 50 U.S.C. §§ 1702 & 1705; Conspiracy to Smuggle Goods from the United States, in violation of 18 U.S.C. § 371 & 554; and Money Laundering, in violation of 18 U.S.C. § 1956(a)(2).

On October 10, 2012, Defendant filed a motion to suppress evidence and suppress statements. On November 8, 2012, the Court held a hearing on the motions. For the following reasons, Defendant's Motions to Suppress Evidence and Suppress Statements will be denied.

I. FACTUAL BACKGROUND

Mohamad Nazemzadeh was born in Iran but now lives in the United States on an H1B employment visa. He is currently employed as a post doctoral research fellow in the Department of Radiology Oncology at the University of Michigan in Ann Arbor, Michigan. According to Defendant his work has received nationwide recognition in the field of radiation therapy in cancer treatment in several peer-reviewed journals and conferences. One of his discoveries has been recognized as a significant development in cancer treatment and, as a result, he was invited to present his work at the annual meeting of the American Association of Physics in Medicine (AAPM) 2012. He applied to be a lawful permanent resident but his petition was subsequently denied. Nazemzadeh has filed a motion to reconsider the immigration case. That motion remains pending.

Agents began investigating Nazemzadeh when an employee ("source") at Soundimaging, a San Diego-based company provided information that an individual was attempting to procure medical equipment for shipment to Iran in violation of U.S. export laws.*fn1 Nazemzadeh first came to the attention of the source when, in November of 2010, he submitted an electronic pricing request for eight MRI coils to Soundimaging. Nazemzadeh said that he represented an Iranian company and that the coils were for export to Iran. According to the Government's brief, the transaction hit a snag when the shipper, TNT, said that it would not ship the coils to Iran. Nazemzadeh then suggested shipping the coils to a Dutch company, but complained in an email that "if we have to ship the coil through [the] Netherlands, it would be much more expensive for us and we should pay that company as well [sic]." In February 2011, Nazemzadeh abandoned the transaction.

On August 12, 2011, Nazemzadeh again contacted the source at Soundimaging by email, this time to ask about the price and availability of an 8-channel HD MRI brain array coil. This is when the source contacted the Department of Homeland Security Investigations ("HSI") about Nazemzadeh's request and forwarded Nazemzadeh's email correspondence with the company to HSI. On August 15, 2011, an HSI undercover agent ("UCA") posing as a sales representative of Soundimaging contacted Defendant by email, and the next day, by phone. The UCA recorded that phone conversation as well as four later conversations. The Court has reviewed the recordings of these conversations as well as copies of email correspondence between the UCA and Nazemzadeh. The "CC" (courtesy copy) field of various of these emails indicated additional parties to the transaction: Kayvan Hashemi, and Moshen Hamayoun.

The correspondence all centers around the purchase of MRI parts for shipment to Iran by using Hospital Equipment Service BV ("HES"), in the Netherlands as an intermediary. Nazemzadeh discussed the possibility of obtaining a license for the transaction but declined to do so. On August 18, 2011, the UCA emailed Nazemzadeh a price quote for the MRI coil and Nazemzadeh replied that HES would wire the money. A few days later, an employee of HES emailed the UCA a copy of the wire transfer from the Netherlands to the undercover account in San Diego. The employee included Nazemzadeh and Hashemi in the CC field. After the wire cleared, the UCA emailed Nazemzadeh and Hashemi, informing them the transfer had cleared and provided a dummy tracking number for the coil, which never shipped.

After realizing the coil was delayed, HES contacted Hashemi regarding the missing coil. The next day, the UCA received an email in Farsi from Hamayoun and forwarded it to Nazemzadeh, who replied that it had been sent to the UCA by mistake. Nazemzadeh also reminded the UCA that he did not purchase the coil. Rather, Nazemzadeh stated HES had purchased it directly from Soundimaging. The UCA later informed Nazemzadeh and his co-conspirators that the package had been held by Dutch customs at the request of United States Customs. He provided a copy of an email from a Homeland Security Investigations officer requesting documents pertaining to the transaction. The UCA forwarded this email to Nazemzadeh as well as two HES employees. Nazemzadeh then encouraged the UCA not to disclose Nazemzadeh's involvement in the transaction, telling the UCA just to show the officers items tending to show the sale was only between Soundimaging and HES. Nazemzadeh suggested that the UCA could remove the Iranian names from the previous email correspondence.

Using information obtained in the email correspondence and recorded phone calls, Agent Sean Downey obtained a warrant to search email accounts belonging to Nazemzadeh, Hamayoun, and Hashemi. [Def. Ex. B.] On January 18, 2012, agents arrested Nazemzadeh at work. After his arrest, Homeland Security Investigations Agents Cole and Downey interrogated Nazemzadeh and he made inculpatory statements.

II. MOTION TO SUPPRESS EVIDENCE OR HOLD A FRANKS HEARING

It is the Defendant's position that the search of his email account and those of his co-conspirators violated the Fourth Amendment and, as a result, all evidence obtained via the warrant to search these accounts must be suppressed.*fn2 Alternatively, Defendant seeks a Franks hearing regarding the accuracy and veracity of the affidavit submitted in support of the search warrant and the scope and execution of the warrant. He argues (1) the warrant was overbroad and failed to comply with Ninth Circuit case law regarding the scope and nature of searches of electronic data; (2) there is no indication the warrant was properly executed; and (3) the search warrant executed on Google and Yahoo was issued based on an affidavit containing material omissions and misrepresentations.

1. Scope of the Warrant

Defendant makes a variety of arguments regarding the scope of the warrant: the warrant contains no search protocol and no specific word search is listed; the warrant allowed the Government to seize and keep the entire contents of Defendant's email account; the warrant permitted seizure of emails pre-dating the time-frame for which probable cause to believe any crime took place existed; the warrant did not comply with Ninth Circuit caselaw because it "did not limit the items to be searched or seized in any way - temporally or substantively . . . ;" the warrant didn't provide for segregation of data, review by an independent investigator not assigned to the case, and allows the Government to keep the data indefinitely. [Def.'s brief at 16-18].

Defendant's arguments are without merit and ignore unfavorable Ninth Circuit law. The Fourth Amendment requires that warrants be based upon probable cause and describe with particularity the things to be seized. U.S.Const. amend. IV. This is known as the "specificity" requirement and encompasses two aspects: particularity and breadth. United States v. SDI Future Health, Inc., 568 F.3d 684, 701-02 (9th Cir. 2009) (quoting In re Grand Jury Subpoenas Dated Dec. 10, 1987, 926 F.2d 847, 856-57 (9th Cir. 1991)). Particularity is the requirement that the warrant must clearly state what is sought.

In determining whether a description is sufficiently precise, we have concentrated on one or more of the following: (1) whether probable cause exists to seize all items of a particular type described in the warrant; (2) whether the warrant sets out objective standards by which executing officers can differentiate items subject to seizure from those which are not; and (3) whether the government was able to describe the items more particularly in light of the information available to it at the time the warrant was issued.

United States v. Spilotro, 800 F.2d 959, 963 (9th Cir. 1986) (internal citations omitted).

In addition to being sufficiently clear, a warrant must also be "legal, that is not overbroad." SDI Future Health, 568 F.2d at 702. "[T]his means that 'there [must] be probable cause to seize the particular thing[s] named in the warrant.'" Id. (quoting In re Grand Jury Subpoenas, 926 F.2d at 857). Therefore, "breadth deals with the requirement that the scope of the warrant be limited by the probable cause on which the warrant is based." Id. Probable cause means a fair probability, not certainty or even a preponderance of the evidence. Id. (internal citations and quotations omitted.).

A. The Warrant Appropriately Granted Permission to Seize Data and Limited Officers' Discretion as they Conducted the Offsite Search

Nazemzadeh argues the warrant was overbroad because it failed to set forth specific guidelines regarding the search protocol and allowed officers to seize "vast amounts" of data and keep it indefinitely. He claims that the warrant should have included a specific search methodology or listed a specific word search. Nazemzadeh's arguments are framed as breadth arguments. However, cases analyzing whether search protocols are required frame the question as one of particularity. See, e.g., United States v. Adjani, 452 F.3d 1140, 1147-50 (9th Cir. 2006) (discussing particularity in response to overbreadth argument).

The parties agree, and are correct, that United States v. Tamura, 694 F.2d 591 (9th Cir. 1982) as applied by United States v. Comprehensive Drug Testing, is the governing standard, 621 F.3d 1162 (9th Cir. 2010) (en banc) (per curiam) ("CDT") ("we have updated Tamura to apply to the daunting realities of electronic searches."). Tamura, provides when probable cause exists, "all items in a set of files may be inspected during a search, provided that sufficiently specific guidelines for identifying the documents sought are provided in the search warrant and are followed by the officers conducting the search. Tamura, at 595. It further provides, "[i]f the need for transporting the documents is known to the officers prior to the search, they may apply for specific authorization for large-scale removal of material, which should be granted by the magistrate issuing the warrant only where on-site sorting is infeasible and no other practical alternative exists." Id. Even where documents not covered by the warrant are seized and retained by the government, suppression is not necessarily required. See Tamura, at 597.

Although evidence was suppressed in CDT, that case's application of Tamura does not mandate suppression here. CDT cautioned that "because over-seizing is an inherent part" of the process of searching electronic records, greater vigilance is called for on the part of judicial officers to strike the correct balance between the government's interest in law enforcement and the right to be free from unlawful searches. CDT at 1177. While compliance with Justice Kozinski's concurrence in CDT would provide a "safe harbor" for agents, it is not required, as Defendant asserts. CDT, at 1183 (Callahan, J., dissenting) ("The concurrence is not joined by a majority of the en banc panel and accordingly the suggested guidelines are not Ninth Circuit law.").

What happened in CDT was very different from the facts at hand as it "was an obvious case of deliberate overreaching by the government in an effort to seize data as to which it lacked probable cause." CDT 621 F.3d at 1172. Agents in CDT obtained a warrant authorizing three categories of business records. However, once agents arrived to execute the warrant, they realized it would take considerable time to separate the materials, so they seized all of the company's records, whether covered by the warrant or not. The intentional seizure of records officers knew was not covered by the warrant was in violation of the Fourth Amendment. Thus, the court cautioned, the "process of segregating electronic data that is seizable from that which is not must not become a vehicle for the government to gain access to data which it has no probable cause to collect." Id. at 1177.

First, agents properly sought, and the magistrate judge properly issued, a warrant authorizing seizure of Nazemzadeh's entire email account. A warrant authorizing blanket removal of all computer storage media for later examination must be premised upon an affidavit giving a reasonable explanation - informing the court of the practical limitations of conducting an onsite search - why a wholesale seizure is necessary. United States v. Hill, 459 F.3d 966, 975-76 (9th Cir. 2006). On-site review of electronic data presents the "serious risk that the police might damage the storage medium or compromise the integrity of the evidence by attempting to access the data at the scene." Id. It also imposes a significant and unjustified burden on police resources and causes disruption of the subject's home or business for the entire time that the search continues. Id. Thus, removal of storage media on which evidence is likely to have been stored is appropriate because "if the search took hours or days, the intrusion would continue for that entire period, compromising the Fourth Amendment value of making police searches as brief and non-intrusive as possible." See id.

Similarly, Defendant's contention that a search protocol was required is contrary to the law in the Ninth Circuit. Hill, 459 F.3d at 978 ("There is no case law holding that an officer must justify the lack of a search protocol in order to support issuance of [a] warrant." "We look favorably upon the inclusion of a search protocol; but its absence is not fatal"). Even without a specific protocol, the underlying limitation of the Fourth Amendment is always reasonableness. Id. at 974. "Computer records are extremely susceptible to tampering, hiding, or destruction, whether deliberate or inadvertent." Id. at 978 (internal quotations omitted). They "are easy to disguise or rename, and were we to limit the warrant to such a specific search protocol, much evidence could escape discovery simply because of [Nazemzadeh's] labeling of the files documenting [his] criminal activity. The government should not be required to trust the suspect's self-labeling when executing a warrant." Adjani, 452 F.3d at 1150.

In this case, the affidavit supporting the warrant follows the advice of Tamura seeking "specific authorization for large-scale removal of material," and explaining why "on-site sorting is infeasible and no other practical alternative exists." Agent Downey presented an application to the magistrate judge supported by an affidavit which outlined "Procedures for Electronically- Stored Information." [Def.'s Ex. B, 11-13.] In this section of the affidavit, Agent Downey stated that federal agents and investigative support personnel are trained and experienced in identifying communications relevant to the crimes under investigation, but personnel of Internet Service Providers, Yahoo!, Inc. and Google, Inc. ("ISPs") are not; analysis of the data requires special technical skills and is time consuming; he also explained that a search and analysis by federal agents on the ISPs' premises would impractical and inappropriate, and cause a severe impact on their businesses. Thus, he requested authority to seize all content of the email accounts in the form of digital copies to be provided by the ISPs. These copies would then be forensically imaged and the image analyzed to identify communications and other data subject to seizure. At the evidentiary hearing, counsel for the Government stated that an image of the data had been provided to the Defendant so that he could know exactly what files had been accessed and retained by the Government - a procedure approved in this Circuit. See Hill, 459 F.3d at 968 (adopting district court reasoning verbatim, United States v. Hill, 322 F.Supp 2d. 1081, 1091-92 (C.D. Cal. 2004)).

In addition to outlining the need for seizure of the entire email account and search protocols to be used, the application for the warrant specified that the search would be limited to:

a. "communications and attachments related to the purchase, sale, shipment and/or transshipment of goods and services of U.S. origin or from the United States for or by "Mohammad Nazemzadeh," Nazemzadeh," . . . "Medi-Trade," "Hospital Equipment Services," "HES," and "Arpa Medical Company";

b. Electronic mail and attachments related to the identities of any co-conspirators;

c. Electronic mail and attachments referring or relating to any U.S. export laws, regulations, or controls;

d. Electronic mail and attachments that provide context to any electronic mail reflecting the criminal activity described in this warrant including any electronic mail sent or receive in temporal proximity to any relevant electronic mail and any electronic mail that identifies any users of the subject account;

[Def.'s Ex. B, Doc. 51-1, at 19.]

This language limits officers' discretion by specifying items (communications and attachments), within certain categories of documents that relate to the commission of a specific crime (purchase, sale, shipment/transshipment of goods in violation of United States export laws). The warrant does not authorize the search of family photos, personal letters, or other items not related to the export of goods to Iran. Therefore, the warrant describes the items to be searched and seized as particularly as could be reasonably expected given the nature of the crime and the evidence in the Government's possession at the time. See United States v. Adjani, 452 F.3d 1140, 1149 (9th Cir. 2006). The language also sets out objective standards by which executing officers can differentiate items subject to seizure from those which are not as opposed to "authoriz[ing] wholesale seizures of entire categories of items not generally evidence of criminal activity." Spilotro, 800 F.2d at 963-64 (invalidating a warrant that simply authorized seizure of various records evidencing violations of multiple statutes listed without stating the precise identity, type, or contents of the records sought or doing anything to tie the documents sought to the crime alleged). Moreover, Defendant has not pointed to any email that is outside the scope of the warrant. Therefore, this Court declines to invalidate the warrant based on the lack of a specific search protocol or based on the offsite search.

B. The Warrant's Authorization of Emails Predating 2010 did not Render it Overbroad

Nazemzadeh contends the warrant was overbroad because it could have been limited to a specific date range, rather than allowing agents to search emails pre-dating 2010 when the alleged criminal activity commenced. However, officers are not required to narrow searches simply because they can do so. See Adjani,452 F.3d 1140. "To require such a pinpointed computer search, restricting the search to an email program or to specific search terms, would likely have failed to cast a sufficiently wide net to capture the evidence sought." Adjani, 452 F.3d at 1149-50. Analogously, temporally restricting the search of Nazemzadeh's email account would likely also have failed to cast a sufficiently wide net. Moreover, probable cause existed in this case to search for instrumentalities of a conspiracy to export goods in violation of United States law. A conspiracy necessarily includes communication among its participants. This communication might take place via paper notes, phone calls, face-to-face conversations, or emails. See id. at 1146. Because Nazemzadeh's knowledge that his actions were in violation of export law is an element of the crime, to be proven at trial, evidence of that knowledge could be present in the form of emails communicating with co-conspirators or others which could have pre-dated 2010. The Court declines to invalidate the warrant on this basis.

C. There is no Evidence the Warrant was Improperly Executed Defendant also argues the execution of the warrant was unreasonable because the Government has provided no evidence that it complied with the 90-day window provided in the warrant for searching the accounts. At the evidentiary hearing, counsel for the Government stated that an image of the data had been provided to the Defendant so that he could know exactly what files had been accessed and retained by the Government. The defense has provided no evidence that the search was unreasonable.

With respect to Defendant's contention that the Government should not be permitted to retain the master copy for authentication purposes, he is correct. The testimony of the agents who removed the documents from their master volumes should suffice for this purpose. Tamura, 694 F.2d at 597 (citing United States v. Helberg, 565 F.2d 993, 997 (8th Cir.1977)).

2. Omissions in the Affidavit/Franks Hearing

Defendant seeks to suppress the fruits of the search warrant executed on his email account on the basis that there are material misrepresentations and omissions in the affidavit submitted to obtain the search warrant. In the alternative, Defendant seeks a Franks hearing on the veracity of the affidavit supporting the warrant. Defendant asserts that Agent Downey improperly omitted all exculpatory statements, which could have led the magistrate judge to conclude that probable cause was lacking from his affidavit in support of the application for search warrant. Specifically, Defendant argues that the affidavit submitted in support of the search warrant was insufficient to support probable cause because it did not support a finding that Defendant "willingly" or "knowingly" sought to export goods in violation of the law. Defendant is incorrect. The affidavit supporting the warrant did not contain misleading false statements or omissions and the warrant was supported by probable cause because the affidavit submitted to the magistrate judge established that there [was] a "fair probability that contraband or evidence of a crime [would] be found in" Nazemzadeh's email account. Gates, at 238.

A. Defendant is not Entitled to a Franks Hearing

There is a presumption of validity with respect to the affidavit supporting a search warrant. Franks v. Delaware, 438 U.S. 154, 171 (1978). A defendant is entitled to a Franks hearing only if he makes "a substantial preliminary showing that the affidavit contained intentionally or recklessly false statements or omissions, and that the affidavit without the misleading statements or omissions would not be sufficient to support a finding of probable cause." United States v. Bennett, 219 F.3d 1117, 1124 (9th Cir. 2000). The effect of misrepresentations or omissions is considered cumulatively. United States v. Stanert, 762 F.2d 775, 780-81 (9th Cir. 1985) (internal quotations and citations omitted). (citing United States v. Esparza, 546 F.2d 841, 844 (9th Cir. 1976)). "The government need not include all of the information in its possession to obtain a search warrant. An affidavit need only show facts adequate to support a finding of probable cause." United States v. Johns, 948 F.2d 599, 606 (9th Cir. 1991) (citing United States v. Ellison, 793 F.2d 942, 947 (8th Cir.), cert. denied, 479 U.S. 937 (1986)). "The omission of facts rises to the level of misrepresentation only if the omitted facts 'cast doubt on the existence of probable cause.'" Id.

"In order to avoid creating a rule which would make evidentiary hearings into an affiant's veracity commonplace, obtainable on a bare allegation of bad faith, a defendant's allegations of intentional or recklessly false statements or omissions cannot be merely conclusory; rather, they must be accompanied by a detailed offer of proof." United States v. Chesher, 678 F.2d 1353, 1360 (9th Cir. 1982). "Affidavits or sworn or otherwise reliable statements of witnesses should be furnished, or their absence satisfactorily explained." Id. (citing Franks, 438 U.S. at 171). Moreover, "[w]e must 'give due weight to inferences drawn from [the] facts by resident judges and local law enforcement officers.'" United States v. Payton, 573 F.3d 859, 861 (9th Cir. 2009) (quoting Ornelas v. United States, 517 U.S. 690, 699 (1996)).

If, at a Franks, hearing the affidavit's remaining content is insufficient to establish probable cause, the search warrant must be voided and the fruits of the search excluded to the same extent as if probable cause was lacking on the face of the affidavit. Franks, 438 U.S. at 154-55.

Nazemzadeh contests two specific statements in the affidavit. He first points to the statement "Nazemzadeh's emails suggested that he knew it was illegal to export U.S. goods to Iran without a license and that he was working with coconspirators to conceal the goods' Iranian end user(s)." According to Defendant, this claim would have been undercut if the Agent had also informed the magistrate judge that Nazemzadeh originally openly inquired about shipping medical items directly to Iran. Second, Defendant argues the statement, "he knew there was an embargo against Iran and that a license is required from the U.S. treasury Department's Office of Foreign Asset Control (OFAC) to lawfully export items to Iran" was misleading because the Agent failed to tell the magistrate judge that Nazemzadeh told the UCA in a phone call that he did not believe healthcare items were on the sanctions list.

Nazemzadeh submits the omission of two exculpatory statements he made in an email to the UCA.*fn3 First, "we do not do anything against U.S. regulations at all . . . The only problem is its shipment to Iran that no shipping company in the U.S. intends to ship the goods to Iran because of the insurance problem." And next, "I emphasis again, that we are not doing anything against U.S. foreign policies at all." [Def.'s Ex. C, Doc 51-1, at 27.]

According to Defendant, the Agent "presented a skewed and misleading portrait of events to the magistrate judge" who could have reached a different conclusion had he been informed of the full picture. [Def.'s brief, Doc. 51, at 21.] Thus, he states, he has met his burden under Franks making a substantial preliminary showing because the Agent knew of the exculpatory statements based on the ROI and omitted them.

Defendant has not made the required preliminary showing. Rather than "pointing out specifically with supporting reasons the portion of the affidavit" that he claims is misleading, Franks at 154, he parsed his many communications with the UCA and cherry picked the few phrases which, taken out of context, appear to be exculpatory. Once the offered statements are read in the context of the remaining communications, it becomes clear that ...


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