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United States v. Carpenter

United States District Court, D. Connecticut

December 24, 2015

UNITED STATES
v.
DANIEL CARPENTER

RULING AND ORDER

Robert N. Chatigny United States District Judge

Defendant Daniel Carpenter is charged in a superceding indictment with mail and wire fraud, money laundering and conspiracy to commit these offenses based on his alleged participation in a fraudulent scheme involving stranger-originated life insurance (“STOLI”). See United States v. Binday, 804 F.3d 558 (2d Cir. 2015) (affirming convictions of insurance brokers who participated in STOLI scheme). Pending are two motions filed by the defendant relating to searches of business premises in 2011 and 2010, which resulted in the seizure of a large number of documents. He contends that in each instance the search warrant applications were tainted by false and misleading statements, the warrants failed to describe the items to be seized with sufficient particularity and the warrants were overbroad. He also complains about the manner in which the searches were conducted and the length of time documents have been retained. He seeks a suppression order preventing use of the documents at any trial in this case and an order requiring the documents to be returned to him. The Government has submitted a comprehensive memorandum arguing that the defendant lacks standing, his challenges to the warrants lack merit and his other complaints do not entitle him to relief. For reasons that follow, I conclude that the defendant has standing to challenge the validity of the warrants for the searches that were done at the main location in question. I also conclude, however, that the documents should not be suppressed or returned and therefore deny both motions.

I. Background

Carpenter has been the target of two separate federal criminal investigations - one conducted by agents of the Department of Labor under the supervision of the United States Attorney’s office in Connecticut; the other conducted by agents of the Internal Revenue Service under the supervision of the United States Attorney’s Office in the Eastern District of Wisconsin. The DOL investigation concerns the STOLI fraud alleged in the superceding indictment, which involves Charter Oak Trust (“COT”) and related entities in which Carpenter has an interest. The IRS investigation concerns abusive section 419 welfare benefit plans involving Nova Benefit Plans LLC (also known as Benistar) and related entities in which he also has an interest. At pertinent times, COT, Nova and related entities had offices at 100 Grist Mill Road in Simsbury, where Carpenter had his main office, and another location in Stamford.

The motions to suppress relate to searches conducted pursuant to a number of warrants: a 2011 search by DOL agents of offices at 100 Grist Mill Road and the location in Stamford for documents relating to the STOLI fraud; and a 2010 search by IRS agents of offices at 100 Grist Mill Road for documents relating to the promotion and administration of abusive section 419 welfare benefit plans. The 2011 search included copying of materials held by the IRS as a result of the 2010 search, making the 2010 search relevant to the present criminal case. The warrants at issue authorized the seizure of various categories of business records. The 2011 warrant for 100 Grist Mill Road and the Stamford location was issued on the basis of an affidavit signed by DOL Special Agent Lynn E. Allen. See Ex. 8 to Gov't's Opp'n (ECF No. 97-2) at 122. The 2010 warrant for 100 Grist Mill Road was issued based on an affidavit signed by IRS Special Agent Shaun Schrader. See Ex. 2 to Def.'s Memo. (ECF No. 83-2). In the course of the searches, vast quantities of business records were seized in both hard copy and electronic form.

II. Discussion

1. Standing

The first issue that must be considered is whether the defendant has standing under the Fourth Amendment. The defendant has standing only if he had a reasonable expectation of privacy in the areas searched or the items seized. See Rakas v. Illinois, 439 U.S. 128, 143 (1978). Such a reasonable expectation can exist in a business office with regard to business records. See Mancusi v. DeForte, 392 U.S. 364, 367-70 (1968) (union official who shared office with several other union officials had standing to challenge state officials’ seizure of records in his custody at the time they were seized). In most cases, however, an employee’s reasonable expectation of privacy is limited to his own workspace, or other areas directly connected with his own activities and responsibilities, and his own papers or papers in his custody. See United States v. Chuang, 897 F.2d 646, 649-50 (2d Cir. 1990) (bank officer had no expectation of privacy in another’s workspace, notwithstanding his operational control over the bank); United States v. Britt, 508 F.2d 1052, 1055 (5th Cir. 1975) (president of corporation lacked standing to challenge seizure of business records from storage area); Wayne R. LaFave, 6 Search & Seizure § 11.3(d) (5th ed.). Similarly, with regard to office computers, an individual’s reasonable expectation of privacy ordinarily does not extend beyond his own computer. See Leventhal v. Knapek, 266 F.3d 64, 73 (2d Cir. 2001) (state agency employee who had exclusive use of his office computer had standing to challenge after-hours search of computer to look for personal files); United States v. Costin, No. 3:05CR38(JCH), 2006 WL 2522377, at*4-*6 (D. Conn. July 31, 2006) (expectation of privacy did not extend to computers outside defendant’s office); United States v. Triumph Capital Grp., Inc., 211 F.R.D. 31, 54 (D. Conn. 2002) (corporate officer lacked standing to challenge search of another’s computer).

The government contends that the defendant has failed to meet his burden of presenting competent evidence showing that he has standing. A defendant seeking to challenge a search of corporate offices usually must submit an affidavit showing that he had a reasonable expectation of privacy in the area searched or items seized. See United States v. Tranquillo, 606 F.Supp.2d 370, 378 (S.D.N.Y. 2009) ("As a preliminary matter, [defendant] has not put forth the foregoing facts - or, indeed, any facts relevant and probative of his privacy interest in the two A & D Carting computers - in a sworn affidavit."); United States v. Sorcher, No. 05 Cr. 799, 2007 WL 1160099, at *8 (S.D.N.Y. Apr. 18, 2007) ("Indeed, the record contains no affidavits from defendants asserting their possessory or proprietary interest in the documents."). No affidavit has been submitted in this case, as the Government emphasizes. Instead, the defendant offers only unsworn statements of counsel.[1]

The Government submits that the absence of an affidavit should be fatal to the plaintiff’s motions to suppress because he denies having control over the offices where the searches occurred, claiming that he "stepped down from all Benistar-related entities in January of 2004, and was never an officer or signatory for Nova or its affiliates." Gov't's Opp'n (ECF No. 97) at 23. Given this denial, the Government argues, the defendant must do more than simply assert through counsel that he had a reasonable expectation of privacy. See Tranquillo, 606 F.Supp.2d at 378 (finding it "implausible" that defendant had a privacy interest in computers when he claimed he "was never an owner, manager or supervisor of [the enterprise]" and "had no role in the [alleged actions]").

Though the absence of an affidavit is somewhat troubling in this case, it is not dispositive, at least with regard to the searches at 100 Grist Mill Road. Even without an affidavit of the defendant (or other competent witness), the record permits a finding that the agents who conducted the searches at 100 Grist Mill Road searched offices used by the defendant himself and seized documents that were either prepared by him or were in his custody or both. In particular, the inventory of items taken in the 2010 search of 100 Grist Mill Road shows that documents were seized from places described as “Daniel Carpenter Office 1" and “Daniel Carpenter Office 2, ” including in some instances the defendant’s correspondence and handwritten notes.[2] In addition, it appears that every computer on the premises was imaged in 2010, and the inventory shows that two of those computers were taken from offices used by the defendant.[3] The inventory for the 2011 search is less clear in these respects but in light of the 2010 inventory, the record is sufficient to support a reasonable inference that the 2011 search of the Grist Mill Road location also encompassed the defendant’s own offices and computers.

Accordingly, I conclude that the defendant should be deemed to have standing to challenge the validity of the warrants for the searches of 100 Grist Mill Road in 2011 and 2010.

2. Particularity and Overbreadth

The defendant devotes most of his briefing to arguments concerning particularity and overbreadth. Careful review of the warrants and supporting ...


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