The Government Cannot Keep Seized Evidence Forever: Second Circuit Decision on Electronic Data

On June 25, 2014, the United States Supreme Court issued a unanimous opinion in Riley v. California, holding that the government generally cannot conduct a warrantless search of a suspect’s cellphone. The decision was front-page news.

Most precedent about warrants is not from the Supreme Court, and most cases do not garner front-page coverage. Most of the guidance we use to defend our clients comes from the lower federal courts. Even though Riley was an unqualified victory for defendants, the lower courts have made some key incremental changes to the law to limit the government.

For example, as I posted last year, the Second Circuit expressed concern with the expansion of the plain view doctrine when the government seized and searched a defendant’s computer. A few months ago, I wrote about a D.C. district court opinion that seriously questioned the breadth and proposed execution of a search warrant for a suspect’s cellphone.

A recent Second Circuit decision continues this quiet drumbeat to limit overbroad government searches and seizures in the context of electronic data. On June 17, 2014, the Second Circuit in United States v. Ganias reversed a tax fraud conviction that had relied on electronic data seized pursuant to a search warrant.

The Anonymous Tip

Stavros “Steve” Ganias ran a modest accounting business in Wallingford, Connecticut that catered principally to individuals and small businesses. Among its clients were Industrial Property Management (“IPM”) and American Boiler, both owned and operated by the same individual.

In 1998, when Mr. Ganias first began working with the individual, IPM had secured a contract to maintain a vacant Army facility elsewhere in Connecticut. Five years later, the Army’s Criminal Investigative Command (“CIC”) received a confidential tip. The tip indicated that IPM employees were stealing items from the Army facility and that IPM had been billing the Army for work IPM was doing for American Boiler. The tipster also told the CIC that evidence could be found at Mr. Ganias’ offices, where he held records for IPM and American Boiler.

Using this tip, CIC investigators applied for and obtain several search warrants, including one to search Mr. Ganias’ business. The warrant, executed on November 19, 2003, authorized the government to seize hard copies of evidence, as well as “computer associated data relating to the . . . operations of [IPM] and American Boiler.”

In executing the warrant, the government created forensic mirror images of the entire hard drives of each of Mr. Ganias’ computers. When he realized that the search would include files beyond the scope of the search warrant, including his personal financial records, Mr. Ganias expressed concern about the seizure. In response, a CIC agent assured Mr. Ganias that only the files “related to American Boiler and IPM” would be retained, and everything else “would be purged[.]”

It will shock you to find out that those statements were not true.

The Taxman Cometh

The government did not review the computer files for eight months. In the interim, though, CIC investigators discovered suspicious information in the hard-copy evidence they had seized from Mr. Ganias’ offices. CIC asked the IRS to help with their investigation.

By December of 2004, the government had segregated IPM and American Boiler data from all other seized electronic data. However, even though the relevant data were isolated and partitioned, the government did not purge any of the non-responsive files.

In 2005, further investigation led the IRS to believe that Mr. Ganias was improperly reporting income for IPM and American Boiler. Digging further, in February of 2006, the IRS suspected Mr. Ganias of underreporting his own income.

The IRS obtained another search warrant to view the portions of the mirror image that contained Mr. Ganias’ personal financial records.

By the time the government secured this second warrant, it was April 24, 2006. The government had possessed Mr. Ganias’ data for nearly two and a half years.

Retained Forensic Mirrors Are Like General Warrants

In February of 2010, Chief Judge Alvin W. Thompson denied Mr. Ganias’ motion to suppress. After a jury trial, Mr. Ganias was found guilty of tax evasion and conspiracy and sentenced to twenty-four months imprisonment. However, Mr. Ganias refused to relent. He appealed his conviction on Fourth Amendment grounds (among others).

The Second Circuit’s decision, by Judge Chin, opens with a general Fourth Amendment analysis. It acknowledges the difficulty of applying traditional notions of constitutional protections to today’s technologies. The Fourth Amendment, Judge Chin noted, was formulated in part to fight general warrants that gave authorities sweeping discretion to search and seize what they liked.

The Court explained that in contemporary society, a hard drive can contain such a wealth and diversity of information that it should be given nearly as much constitutional protection as a defendant’s house. Therefore, the reasonableness of a hard drive search depends in part on the scope the seizure.

The Court addressed a relatively narrow question: whether government officials, in executing a warrant for a specific batch of computer files, may

indefinitely retain every file on that computer for future use in criminal investigations.

The answer is no.

The main rationale was that the government’s actions here smacked of a general warrant.

If the 2003 warrant authorized the Government to retain all the data on Ganias’ computers on the off-chance the information would become relevant to a subsequent criminal investigation, it would be the equivalent of a general warrant. The Government’s retention of copies of Ganias’ personal computer records for two-and-a-half years deprived him of exclusive control over those files for an unreasonable amount of time. This combination of circumstances enabled the Government to possess indefinitely personal records of Ganias that were beyond the scope of the warrant while it looked for other evidence to give it probable cause to search the files. This was a meaningful interference with Ganias’ possessory rights in those files and constituted a seizure within the meaning of the Fourth Amendment.

The Court rejected the government’s arguments in two ways.

First, the Court held that the government’s attempt to cure the problem was inadequate. While the government did secure a warrant in 2006, allowing government agents to hold computer data indefinitely and access them like an evidentiary ATM whenever convenient would strip the Fourth Amendment of its power. As the Court said

If the Government could seize and retain non-responsive electronic records indefinitely, so it could search them whenever it later developed probable cause, every warrant to search for particular electronic data would become, in essence, a general warrant.

Second, the Court rejected the government’s argument that destroying non-responsive information was impracticable because it would rupture the chain of custody for the evidence under the original warrant.

  • The Court refused to believe that the government could not preserve the chain of custody and prove the authenticity of computer data, even if it were to delete the segregated files.
  • Even if it were necessary to retain those files for purposes of authentication, those files could not provide the government with the authority to use the retained information in any other criminal investigation.

The majority closed its decision by ruling that, because the government’s violation of the Fourth Amendment was both deliberate and lacking good faith, exclusion of the evidence was the appropriate remedy. The court then vacated Mr. Ganias’ conviction and remanded the case to the lower court.

Where Does Ganias Leave Us?

Scott Greenfield (an actual criminal defense lawyer) wrote an excellent post about this decision, rebutting commentary by Orin Kerr (an actual . . . law professor) about the case.  It’s worth reading, if only to get a sense of how this “victory” probably destroyed must of the last ten or so years for Mr. Ganias.

That said, the decision is still a victory for the next criminal defendant. It may prevent a prosecutor from overreaching in the first place, and it gives the next defense lawyer powerful precedent to undercut the government’s improper retention and use of electronic data.

Every win counts.

Congratulations to Mr. Ganias and to his lawyers (from Day Pitney LLP), who undoubtedly fought hard for this reversal. It may be too much to hope, in light of the Riley case and this one, that the courts will continue to protect defendants from overbroad and effectively unlimited searches of their electronic data.

But as Martin Luther King, Jr. said: “We must accept finite disappointment, but never lose infinite hope.” Isn’t that what every criminal defense does on a daily basis?

This entry was posted in Appeal, Fourth Amendment, Search warrant, Tax fraud. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s