The opinion of the court was delivered by: WEINFELD
Fourteen defendants have been indicted upon charges of violating and conspiring to violate the Racketeer Influenced and Corrupt Organizations ("RICO") statute
and committing the crimes of mail fraud, bankruptcy fraud, income tax evasion and conspiracy to commit bankruptcy fraud and tax fraud. In broad outline, the indictment charges that over a six-year period the defendants, in varying combinations, fraudulently operated restaurants and bars under concealed and hidden ownership through "front" companies; submitted false information in support of applications for liquor licenses from the New York State Liquor Authority in order to conceal their actual ownership interests; skimmed from the receipts of such restaurants and bars over two million dollars, which they failed to report to state and federal taxing authorities; made fraudulent statements and kept fraudulent accounts regarding the corporations which operated the bars and restaurants; made false statements and submitted false records in Chapter XI proceedings before the United States Bankruptcy Court for the Southern District of New York; and used the mails to defraud -- in sum, the indictment alleges a RICO enterprise which included the fourteen defendants and six corporations that owned the bars and restaurants named in the indictment. In addition to these charges of criminal conduct, the indictment, pursuant to RICO's forfeiture provision,
seeks the forfeiture of property or interests acquired by any defendant in violation of RICO. Defendants bring numerous motions, including ones seeking suppression of evidence acquired through a program of electronic surveillance, challenging the legal sufficiency of the indictment, and addressing matters of pre-trial and trial procedure.
I. The Legal Basis of the Surveillance Orders
The government investigation which culminated in this indictment included extensive electronic surveillance of the office premises of C & I Trading, a partnership registered in the names of defendants matthew Ianniello and Benjamin Cohen. This surveillance, whose legality is challenged by the defendants, was ordered by the district court after an application by the government on August 26, 1982, and was conducted, pursuant to extensions of the original order, through December 27, 1982. Concealed audio and video surveillance equipment was installed at C & I Trading, which occupied a suite of offices on the 18th floor of a building in midtown Manhattan. According to an affidavit submitted by defendant Benjamin Cohen, at the time of the surveillance he and Matthew Ianniello shared a single office within the suite.
Other offices within the suite were sublet to lawyers. One of these attorneys, Carl Moskowitz, is named as a co-defendant in this case; two others, not charged with any illegal activity, also subleased offices in the suite at the time the surveillance took place.
Defendants challenge the surveillance on numerous grounds, including an alleged extension of the authorization issued by the Assistant Attorney Genera, the sufficiency of the evidence presented as showing probable cause for the issuance of the surveillance orders, and the legal sufficiency of the order authorizing the use of video surveillance.
A. Authorization by the Justice Department
Defendants move for the suppression of all evidence resulting from electronic surveillance on the ground of improper authorization. In particular, defendants point to the fact that the Assistant Attorney General's authorization permitted an application for interception of communications "from the offices of Matthew Ianniello and Benjamin Cohen, situated within the premises known as C & I Trading located at 135 West 50th Street, New York, New York," while the application submitted to the United States District Judge Tenney requested authority to intercept conversations "of Matthew Ianniello and Benjamin Cohen, and others as yet unknown, occurring within the offices of C & I Trading, 135 West 50th Street."
This claimed variance between communications "from the offices of Matthew Ianniello and Benjamin Cohen" and conversations "of ... Ianniello and ... Cohen ... occurring within the offices of C & I Trading" is, in defendants' view, a fatal violation of the demands of Title III of the Omnibus Crime Control and Safe Streets Act of 1968,
which governs the authority of the federal courts to order electronic surveillance. The authorization from the Assistant Attorney General, in defendants' reading, permitted electronic surveillance only in the offices of Cohen and Ianniello within the suite, and was thus more restrictive than the application submitted by the United States Attorney to the district court.
Defendants' hypertechnical reading of the Attorney-General's authorization is without foundation. The Assistant Attorney General had before him the proposed order to be submitted to the district court at the time the authorization letter was issued.
Thereupon the Assistant Attorney General issued the authorization letter approving the application to the district court. Defendants do not claim that this application as submitted to the district court lacked the requisite specificity; rather, they argue that it impermissibly exceeded the authorization. Since the Assistant Attorney General had the proposed application before him when the authorization was issued, this objection is without substance.
In addition, United States District Judge Tenney, who issued the order authorizing the surveillance, did not adopt either the language of the Assistant Attorney General's authorization or that of the application by the Assistant United States Attorney. The order authorized the interception of communications "occurring within the premises known as the offices within C & I Trading, 135 West 50th Street, New York, New York of Matthew Ianniello and Benjamin Cohen and others as yet unknown."
The district court independently evaluated the material before it, and issued an order specifying the permitted area of search.
Moreover, it is clear that variances in working between or among the authorization letter from the Attorney General, the application to the district court, and the court's order directing surveillance, even assuming they are technical violations of the requirements of Title III, do not mandate suppression of the fruits of the surveillance. The Supreme Court has held that not all violations of the provisions of Title III require suppression. "To the contrary, suppression is required only for a 'failure to satisfy any of those statutory requirements that directly and substantially implement the congressional intention to limit the use of intercept procedures to those situations clearly calling for the use of this extraordinary investigative device.'"
The statutory provision relevant here requires that
each application for an order authorizing or approving the interception ... shall include the following information: ... (b) a full and complete statement of the facts and circumstances relied upon by the applicant to justify his belief that an order should be issued, including ... (ii) a particular description of the nature and location of the facilities from which or the place where the communication is to be intercepted.
Defendants argue that since this provision is intended to implement the Fourth Amendment requirement of particularity, the asserted violation here is within the Donovan standard.
However, the application was specific. If there is any violation at all, it arises from the fact that the authorization by the Attorney General differed slightly from the application presented to and independently evaluated by the district court. This circumstance does not fall within the Donovan test. The Supreme Court has said that the congressional purpose underlying the requirement of authorization by the Attorney General was to "condition use of intercept procedures upon the judgment of a senior official in the Department of Justice..."
This review by the appropriate senior official took place. Moreover, as noted above, the district court, in granting the application, made an independent judgment as to the proper working of the order. In addition, the central purpose of ensuring that the applications for wiretap authorization meet the Fourth Amendment's requirement of particularity was also served, both through the specific wording of the application itself and by the affidavit of FBI Special Agent Brian Taylor submitted in support of the application, as required by 18 U.S.C. § 2518(1)(b). The function of measuring the authorization and application against the demands of the statute was performed by Judge Tenney, who was provided with all the information required both by the statute and by the Constitution. Even if the variance in haec verba between the authorization and the application was a violation of the technical requirements of Title III, it did not "directly and substantially" impede the implementation of the congressional purpose underlying the statute, and suppression is therefore inappropriate.
B. Probable Cause for the Surveillance Orders
In its initial application for electronic surveillance at C & I Trading, the government relied upon the affidavit of Brian Taylor, the FBI Special Agent supervising the investigation of Matthew Ianniello and Benjamin Cohen, about whom the initial investigation centered. The essence of the probable cause showing made by Agent Taylor in his affidavit was based upon information received from five unidentified individuals, all of whom had given such information to the FBI regarding alleged loan-sharking activity by Matthew Ianniello and Benjamin Cohen. The only identified informant upon whose information the government relied was James Fratianno, a self-proclaimed former member of the Cosa Nostra, who had previously testified in other proceedings concerning the existence and structure of this organization. In particular, Fratianno told the FBI at an interview in 1982 that during 1977 he had been introduced to Matthew Ianniello by a third party whom Fratianno knew to be a member of the Cosa Nostra. Fratianno said that he learned at this time that Ianniello was a capo, or lieutenant, in the Genavese Family of the Cosa Nostra, and that one of his enterprises on behalf of the family was a loan-sharking operation.
This information provided by Fratianno was five years old at the time of the application for surveillance; it was supplemented by the testimony of the five anonymous informants designated sources A through E by the FBI. Each of the five informants had some "track record" by which is reliability and accuracy had been judged by the FBI. Each had been providing information about organized crime activities for more than a year; two of the sources had been cooperating with the FBI for more than a decade. In each instance, Agent Taylor averred, information provided by the five sources had been corroborated by subsequent investigation by the Bureau. Agent Taylor swore that three of the five sources are known to the FBI as members of the organized crime syndicate called the Cosa Nostra, and are thus judged by the Bureau to be well-placed to report on activities of other Cosa Nostra members.
For of these five sources, A, B, C and I, told the FBI agents investigating Matthew Ianniello that they knew from conversations with other people that Ianniello and Benjamin Cohen (identified only as Cohen by one source) ran a loan-sharking business at C & I Trading. Source C told the FBI that he had spoken with one person who had applied to Cohen and Ianniello for a loan at C & I Trading in July 1982. The terms of the loan, if any, were not related.
Source E, who said he was personally acquainted with Matthew Ianniello, told the FBI that he had learned from conversations with Ianniello, his associates, and those to whom Ianniello has lent money how Ianniello's loan-sharking business is organized.
The FBI obtained corroboration of these tips to the extent of verifying that C & I Trading was a partnership organized in New York by Matthew Ianniello and Benjamin Cohen, ascertaining that its offices were at the address reported by the informants, and establishing that both Ianniello and Cohen worked at that address.
The defendants contend that the testimony of the anonymous informants was little more than a compilation of unverified hearsay, and that the independent corroboration undertaken by the FBI provided no substantial reason to credit the testimony of the informants. For this reason, they argue, the evidence offered in the original application was insufficient to show probable cause for the issuance of the surveillance order by the district court.
The recent decision of the Supreme Court in Illinois v. Gates,
provides guidance on the review of probable cause decisions based upon the testimony of anonymous informants. In Gates the Court reaffirmed its previous holding that "so long as the magistrate had a 'substantial basis for ... conclud[ing]' that a search would uncover evidence of wrongdoing, the Fourth Amendment requires no more."
"A magistrate's 'determination of probable cause should be paid great deference by reviewing courts.'"
The decision in Gates also establishes that while the criteria of "veracity," "reliability," and the informant's "basis of knowledge" are highly relevant elements in determining the value of an anonymous informant's testimony, probable cause must be established upon the totality of the circumstances presented.
In this case the district court was presented with the testimony of five anonymous informants of previously established reliability. Each had a substantial history of providing information to law enforcement authorities regarding alleged activities of organized crime; each had provided information in the past which had been subject to corroboration by independent investigation. Furthermore, each informant set out the basis of his knowledge of the alleged loan-sharking activity. Defendants object that much of his evidence was hearsay. This is irrelevant.
What is relevant is that Agent Taylor in his summary of the information carefully distinguished between those statements of the informants which were supported by hearsay and those which resulted from personal knowledge; the district court was able to make an independent evaluation of the evidence. Moreover, not all of the evidence supporting the application was hearsay; one informant swore that he had engaged in direct contact and conversations with Ianniello.
In view of the Supreme Court's oft-repeated teaching that probable cause is a "practical, nontechnical conception,"
and mindful of the limited scope of the review of the decision of an issuing magistrate who has been provided with "sufficient information ... to allow that official to determine probable cause,"
this Court finds, upon the totality of the evidence, that the issuing Court had before it ample evidence to support its finding of probable cause for the issuance and extension of the surveillance order challenged by the defendants.
Defendants contend that because the government relied upon unnamed informants for the factual basis of its original probable cause showing the Court should hold a hearing, either in open court in in camera, to establish the informants' identities and bases of knowledge. In support of this request, defendants offer the completely unsubstantiated claim that "there is good reason to believe that these informants simply did not exist."
Without the slightest factual basis of any kind, defendants in effect accuse of false swearing the Assistant United States Attorney and the Special Agent of the FBI whose affidavits supported the surveillance applications. The charge is utterly unfounded. This free and easy casting of aspersions upon the integrity of government counsel is no substitute for the factual demonstration which defendants are required to make before this Court.
Nor, as defendants contend, is the Court required to conduct such a hearing merely because the information provided by confidential sources was the basis for the government's probable cause showing before Judge Tenney. The Supreme Court has repeatedly held that disclosure of the identity of confidential informants is not required, but that such disclosure may be ordered by the trial court in the exercise of its discretion, balancing the defendant's constitutionally-protected interests against the public interest in protecting those who come forward to provide information about criminal wrongdoing.
In its most recent interpretation of the Supreme Court's decisions in this area, our Court of Appeals addressed the claim that defendants seized pursuant to an arrest warrant where entitled to the names of informants upon whose information the authorities relied. The district court had conducted an in camera examination of the informants; the Court of Appeals held that this was "if anything, considerably more accommodating to appellants' demand than was necessary."
This holding is supported by other cases in which the Court has considered and denied requests for disclosure of the identities of informants in cases of warrantless arrests and searches.
While there may be justification for requiring disclosure of informants' identities upon a trial, where essential to a fair determination, the rationale does not apply where, as here, the trial court is presented with an arrest or search pursuant to a valid warrant. Where a warrant has issued, the judicial determination as to probable cause has already been made, and the scope of the trial court's review is limited by the deference due that determination.
There can be no doubt that a warrant may legitimately be predicated in part upon information provided by unnamed or even anonymous informants.
In view of the Court's finding above that judge Tenney's surveillance authorizations issued upon probable cause, defendants bear the burden of showing in what specific fashion the government's reliance upon informants, not produced before the issuing judge at the time of the warrant application, prevented the court from making an informed determination as to probable cause.
Instead of meeting that burden, defendants have instead made accusations of government misconduct based entirely upon the fertility of their counsel's imaginations. The motion to compel production and examination before the Court of the government's confidential informants is denied.
C. Alternative Investigative Techniques
Defendants also move for the suppression of all evidence resulting from electronic surveillance on the ground that the government failed in its initial application to make a showing that normal investigative procedures could not be used, as required by Title III.
Under the statute, the government must show that other "investigative procedures have been tried and failed or ... reasonably appear to be unlikely to succeed if tried or to be too dangerous."
The government's showing in this case was concentrated in four paragraphs of the affidavit submitted by FBI Agent Taylor.
First, Agent Taylor indicated on the basis of "several brief physical surveillances" of the 18th floor of 135 West 50th Street, where C & I Trading was located, that "prolonged surveillances are virtually impossible on this floor since strangers would be viewed with a great deal of suspicion." The government in opposition to this motion amplifies this point by explaining that physical surveillance would have been unhelpful in any event, since it would have revealed only the comings and goings of the known targets of the surveillance, and not the identities and roles of the other, unknown members of the conspiracy under investigation, or the events that occurred within the premises where the alleged illegal conduct was carried on.
Agent Taylor further stated that the anonymous informants in the case were unwilling to testify upon a trial; that "interviews of extortion and loanshark victims [were] not feasible because of the risk that these interviews would alert ...