United States District Court, N.D. California
ORDER DENYING MOTION TO SUPPRESS FURTHER EVIDENCE AS
FRUIT OF THE POISONOUS TREE
CHARLES R. BREYER UNITED STATES DISTRICT JUDGE
criminal case, the sprawl of litigation about the alleged
taint from unlawful stationary audio recordings has
approached that of the investigation itself. But unlike the
latter, the former has come up empty.
October 2009, two brothers reported extensive bid-rigging at
public foreclosure auctions in San Francisco and San Mateo
counties. The men-known as “CHS-AG” and
“CHS-RG”-told authorities that they had been
asked to make cash payoffs to keep bidding down. See
Gov't Exs. 87, 162. They identified Mo Rezaian, Dan
Rosenbledt, and Defendants Joseph Giraudo, Raymond Grinsell,
and Kevin Cullinane as members of the alleged
investigated. Agents reviewed documents obtained from the
brothers and began conducting surveillance of the San
Francisco and San Mateo auctions. See Jan. 17, 2017
Tr. at 20; Jan. 19, 2017 Tr. at 265-66, 350. CHS-RG and an
undercover agent (“UCE”) continued participating
in the allegedly collusive conduct-wearing hidden
microphones. Jan. 19, 2017 Tr. at 265-66. Other agents
photographed and videotaped the goings-on from discrete
locations. Id. This new, lawfully obtained evidence
“rapidly corroborated” the brothers' reports
of rampant bid-rigging and pointed to a host of additional
suspects. Feb. 11, 2016 Tr. at 183; Jan. 19, 2017 Tr. at
these additional suspects were Gajan Thia and Juan Diaz. On
December 6, 2009, CHS-RG overheard Thia agree not to bid
against Cullinane in exchange for a $15, 000 payoff from
Rezaian and Rosenbledt. Gov't Ex. 101; Def. Ex. 2-81.
Though the conversation was not captured on his microphone,
CHS-RG reported the agreement the next day. Id. He
also told the government that Thia was working with Diaz, and
that together they ran a company called Equity Chase Inc.
December 2009, the government feared that the brothers'
relationship with Defendants had soured. Feb. 11, 2016 Tr. at
56, 72-73. In an attempt to capture out-of-earshot
conversations, agents planted stationary recording devices on
an unmarked police car, backpack, sprinkler, and (fittingly)
a planter. Id. at 36, 115. Despite its concerns, and
despite deploying these stationary devices, the government
did not give up on its original investigative methods. Jan.
19, 2017 Tr. at 274. CHS-RG, for example, reported that Thia
had made a pay off to Rezaian and that a man named Bob
Williams appeared to have done the same for Defendant Abraham
Farag. Gov't Exs. 76, 112. He also identified Defendant
James Appenrodt as a participant in the apparent bid-rigging.
Jan. 19, 2017 Tr. at 270-71. FBI agents, for their part,
continued surveilling the auctions.
Agent Roahn Wynar was doing just that on January 28, 2010,
when he saw a conversation between Rezaian, Rosenbledt, and
Thia erupt into an argument. Jan. 17, 2017 Tr. at 107.
Fearing a fight to follow, Agent Wynar intervened and
escorted Thia away from the confrontation. Id. at
109. He then identified himself as a law enforcement officer
and asked Thia to meet later that day. Id. at
110-11. When they met again, Thia explained that Rezaian and
Rosenbledt had accused him of trying to “piggy
back” off of certain bids. Gov't Ex. 74 at 2. Thia
also implicated Cullinane, Rosenbledt, Grinsell, and others
in bid-rigging.Id. at 1. Agent Wynar told him
that the government was investigating collusive activity at
the auctions and recommended that Thia retain an attorney.
Jan. 17, 2017 Tr. at 89, 106. He also asked Thia not to tell
anyone else about the investigation. Id. at 106.
took Agent Wynar's advice about getting a lawyer but
broke his promise about keeping the investigation a secret.
See Jan. 19, 2017 Tr. at 309-10; Feb. 27, 2017 Tr.
at 528; Jan. 17, 2017 Tr. at 114. He tipped off Diaz about
the investigation, spurring the latter to lawyer-up himself.
Jan. 17, 2017 Tr. at 114; Def. Ex. 2-122. Diaz's attorney
then contacted the government and offered to cooperate.
Id. The government interviewed Thia and Diaz several
times, and both men admitted to bid-rigging in San Mateo as
well as in the East Bay. Gov't Exs. 196-200; Def. Exs.
2-112, 2-122. Their cooperation was formalized soon after.
Feb. 27, 2017 Tr. at 391, 439. Neither was charged with a
March 2010, the government used information supplied by Thia
to apply for pen registers on phones belonging to Rezaian and
Giraudo. Gov't Exs. 98-100. Those applications did not
refer to stationary audio recordings, Jan. 19, 2017 Tr. at
32, though they contained information about a property
discussed on them, Park Pacifica, see, e.g., Feb.
27, 2017 Tr. at 422.
investigation continued apace. CHS-RG, CHS-AG, and UCE
recorded further incriminating conversations on their hidden
microphones, while agents conducted more physical
surveillance. See Opp'n at 8-9 (providing
relevant citations to the record). In November and December
of 2010, agents searched Rezaian's and Giraudo's
trash, where they found spreadsheets chronicling purchases of
various properties and, for some purchases, memorializing an
accompanying bid-rigging agreement. See Gov't
Exs. 120-22, 168, 193. The government used that information,
along with further evidence supplied by cooperators and FBI
agents, to apply for search warrants of Giraudo's and
Rezaian's houses, Giraudo's car, and Grinsell's
office, among other locations. Gov't Exs. 83-87; Jan. 19,
2017 Tr. at 274-75; Feb. 28, 2017 Tr. at 615. Like the pen
register applications, these contained information about Park
Pacifica but did not refer to stationary audio recordings.
See Jan 17, 2017 Tr. at 86-88; Jan. 19, 2017 Tr. at
executed the searches in January 2011. They recovered a heap
of incriminating evidence, including detailed records of
hundreds of payoff agreements from Rezaian's computer,
cell phone, and paper notes. Gov't Exs. 119, 147. With
this new evidence in hand, the government convinced ten
alleged conspirators to plead guilty over the next 18 months:
Craig Lipton, Laith Salma, James Doherty, Patrick Campion,
Henri Pessah, Keith Goodman, Troy Kent, Gary Anderson, Lydia
Fong, and Matthew Worthing. Several of them implicated
Rezaian, Rosenbledt, and Defendants in collusive activity.
See, e.g., Def. Exs. 2-95, 2-103.
November 19, 2012, the government met with Rezaian's
attorneys, who had “expressed an interest in seeing if
[they] could work out a plea.” Feb. 28, 2017 Tr. at
643. The 45-minute presentation included an overview of the
three parallel investigations happening in San Joaquin
County, Contra Costa and Alameda County, and San Francisco
and San Mateo Counties. Gov. Ex. 123. It made clear that
several members of the alleged conspiracy were cooperating
and detailed numerous inculpatory documents, including those
obtained from Rezaian. Id. It also contained
surveillance photographs and some 19-plus minutes of lawfully
obtained video and audio recordings. Gov't Ex. 72. And,
notably for present purposes, the presentation included a
25-second audio clip from a stationary audio recording of an
incriminating conversation, albeit one for which both CHS-RG
and UCE were present and mic'd up. Feb. 28, 2017 Tr. at
652-54. Two months later, the government met with
Rosenbledt's attorneys and showed them a tweaked version
of the same presentation. See id.; Def Exs. 2-76, 2-77;
Gov't Ex. 73.
January 23, 2013, Rezaian's business partner, Norman
Montalvo, pleaded guilty. Feb. 28, 2017 Tr. at 648;
United States v. Montalvo, case no. 12-cr-0785-CRB
(dkts. 10, 11). He, like others before him, proceeded to
implicate Rezaian and Rosenbledt, along with several
Defendants in the alleged scheme. See Gov't Exs.
184, 230. On February 20, another alleged co-conspirator,
Gilbert Chung, pleaded guilty. See United States v.
Chung, no. 13-CR-0069-CRB (dkt. 6). On May 2-some six
months after his attorneys sat down with the
government-Rezaian pleaded guilty. Gov't Ex. 80.
months later, Bob Williams pleaded guilty to bid-rigging
charges of his own. See United States v. Williams,
no. 13-CR-0388-CRB (dkt. 8). On November 4, Kuo Hsuan Chang
did the same. See United States v. Chang, no.
13-CR-0670-CRB (dkt. 11). The next day-some eight months
after his attorneys sat down with the government-Rosenbledt
pleaded guilty. Gov't Ex. 81.
were indicted in October 2014 and, about a year later, moved
to suppress the stationary audio recordings and any evidence
tainted thereby under the Fourth Amendment and Title III of
the Omnibus Crime Control and Safe Streets Act of 1968.
See Mot. to Suppress (dkt. 58). After conducting an
evidentiary hearing, the Court granted the motion to suppress
all stationary audio recordings. See Order on Mot.
to Suppress (dkt. 149) at 18-19. It then conducted another
evidentiary hearing to determine what evidence, if any, was
tainted by the now-suppressed stationary audio recordings.
The parties submitted (yes) 154 pages of further briefing.
Based on that sprawling record, the Court makes the foregoing
findings of fact and the following conclusions of law.
Fourth Amendment and Title III protections have their
differences, see, e.g., Clarifying Order (dkt. 191)
at 7, the scope of their fruit-of-the-poisonous-tree
doctrines is not one of them. See United States v.
Smith, 155 F.3d 1051, 1059 (9th Cir. 1998) (citing
United States v. Spagnuolo, 549 F.2d 705, 711 (9th
Cir. 1977)). So to decide whether evidence is
“derived” from an unlawfully intercepted
communication under 18 U.S.C. § 2515, the ...