The opinion of the court was delivered by: Spatt, District Judge.
This suppression hearing was initiated because of the
information provided in a letter from Douglas E. Grover, Esq.,
dated March 9, 2001. In this letter Attorney Grover asserted
that there was a theft of documents from the Numisgroup offices
by an undercover informant, which theft constituted an illegal
search. Further, Attorney Grover contends that this illegal
seizure by an agent of the Government vitiates the search
warrant previously issued, under which multitudes of records
were seized by the Government. The defendants move for the
suppression of these documents.
The affidavit in support of the application for arrest and
search warrants, by United States Postal Inspector Sol Farash,
dated February 25, 2000 describes a conspiracy to defraud with
regard to the sale of valuable coins. In this affidavit,
Inspector Farash describes a "boiler room" sales operation
consisting of a scheme to "fraudulently sell items (coins) at
highly inflated prices by means of false and fraudulent
representations." Inspector Farash conducted an investigation
into the activities of the coin sale businesses involved in this
case. He interviewed approximately twenty persons who purchased
coins from Numisgroup, Galerie des Numisatique and/or Meridian.
Farash also interviewed "a confidential informant," we now know
to be one Michael Zelen, "who at the direction and under the
supervision of law enforcement agents, obtained a position as a
sales person with Numisgroup."
A review of the affidavit in regard to the allegations leading
to this suppression hearing reveals that Inspector Farash
interviewed George Barre, Roxie Hollingshead and John Pirile,
names of customers given to him by the confidential informant.
These customers gave relevant information to Farash.
Of course, if the Numisgroup search is found to be invalid,
virtually all the documentary evidence seized by the Government
from the Numisgroup offices may require suppression as "fruits
of the poisonous tree." Wong Sun v. United States,
371 U.S. 471, 487-88, 83 S.Ct. 407, 417-18, 9 L.Ed.2d 441 (1963).
II. THE HEARING — FINDINGS OF FACT
There were only two witnesses presented at the hearing,
Inspector Sol Farash and Michael Zelen, both produced by the
Inspector Sol Farash testified that he was first involved in
this matter when he received a call from United States Postal
Inspector Mike Hartman from the Harrisburg, Pennsylvania
division. Hartman advised him that he had a coin boiler room
case and "that he had an individual who was willing to work, who
came from the Long Island, New York area." That person, Michael
Zelen, had been arrested for and pled guilty to another crime in
Pennsylvania. Zelen told Farash about coin boiler rooms on Long
Island, including companies called Numisgroup and Nationwide,
also known as Meridian, in Holbrook, with one Bob Dupurton as
the owner. Zelen told Farash that Dupurton was selling "rare
coins" in a classic boiler room operation. Zelen also mentioned
other companies called New World Rarities and Heritage
Zelen responded to an employment ad by Numisgroup and set up
an interview with John Laura of that company. Farash recalled
that he had arrested a John Laura six or seven years ago for a
boiler room operation involving chemicals. On September 7, 1999,
the day Zelen was to start work at Numisgroup, he met with
Farash who directed him to comply with seven conditions (see
U.S. Ex. 7). One of the conditions was: "4. You do not do
anything illegal. Must Be Clean."
Q And more.
But all you wrote down is you did not — do not
do anything illegal, must be clean; is that
Q On direct examination did you say you said
something additional in that vein?
Q What was it that you recollect you told Mr. Zelen
along that vein?
A In substance, I don't want him stealing anything. I
don't want him cheating anybody. I don't want
anything illegal. In other words, you have to be
squeaky clean because you are an agent of the
Q And those are the things that you recollect telling
A In substance, yes.
Q Don't steal anything?
Q Don't take anything?
Q Don't do anything illegal?
Q You are an agent of the government?
Q Did he tell you that he understood that, sir?
A He understood it by signing the document.
Tr. at 16-17, 68-69.*fn*
Zelen signed the written seven-condition memo.
After he commenced his employment with Numisgroup, Zelen sent
Farash a series of fax transmissions including some Numisgroup
documents. The questionable potentially illegally seized
evidence is contained in these fax transmissions and the
documents enclosed. Farash also denied seeing any "folders" that
Zelen may have created. All the information he obtained from
Zelen was by fax or by telephone. There are two types of
potentially illegal evidence "seized" by Zelen. First, the
documents he sent to Farash. Second, the names of customers he
related to Farash. As will shortly be shown, the proof is clear
that none of this evidence was illegally seized.
The Court had to review the documents sent by Zelen to Farash
and ascertain how they were obtained. There were approximately
22 documents sent by Zelen to Farash while employed by
Numisgroup. Many of them can be easily shown to be records given
to Zelen by his employer or co-employees in the course of his
employment; clearly with no reasonable expectation of privacy
and not illegally seized. Among these documents are Zelen's own
paychecks and commission reports; the memo to the staff (U.S.Ex.
1E); and the sketch of the office made by Zelen (U.S.Ex. 1S).
The other documents sent by Zelen to Farash will be addressed by
the Court in its review of Zelen's testimony.
The final Zelen fax transmission was received by Farash on
January 29, 2000. Of importance to this inquiry, Farash
testified that he interviewed several witnesses whose names were
furnished by Zelen, namely, George Barre, Roxie Hollingshead and
The key witness at this hearing was the confidential
informant, Michael Zelen. The Court found Zelen to be a very
credible witness. His answers were responsive both on direct and
cross examination and he showed an admirable candor in revealing
Zelen pled guilty in the United States District Court in the
Middle District of Pennsylvania to conspiracy to commit mail and
wire fraud. He was sentenced in April 2000 to 27 months, later
reduced to 11 months. Zelen testified that, at the suggestion of
Inspector Hartman, he called Inspector Farash in the first week
of September. He wanted to cooperate in the investigation of
boiler rooms on Long Island, for "it might somehow benefit me
down the road. . . . He would speak to the U.S. Attorney on my
behalf." (Tr. at 153). At the time Zelen was living in Nesconset
on Long Island. Zelen signed the seven-condition memorandum
presented to him by Farash on September 7, 1999. He received
instructions from Farash at that time not to do anything
illegally and just gather information.
Zelen answered a Numisgroup ad in the newspaper, was
interviewed by John Laura and was hired as a coin salesman to
follow leads obtained by Numisgroup advertisements. The sales
were conducted by telephone. At first, he worked in the
"bullpen" or pit area for a few months. In the bullpen he worked
in the same area as 5 or 6 other salespeople. Zelen was then
moved to an office which he shared with Rob Garner and Calvin
Richards. In these shared offices he received leads from the
other salespersons who were unsuccessful in their own selling
Zelen sent a number of fax transmissions to Farash, some of
which enclosed documents. In the significant phase of this
hearing, Zelen explained how he obtained these documents. The
Court will now review this testimony:
Govt. Exhibit 1A — wiring instructions. Zelen testified that
this document was tacked on a bulletin board or was in the
drawer of the unlocked desk assigned to him.
Govt. Exhibit 1B — a fax dated April 1, 1999 to Alan Leonard
at Numisgroup from customer Gregg Holden, complaining about the
prices he paid for the coins sold to him by Alan Leonard. Zelen
testified that Alan Leonard was a salesman at Numisgroup when he
worked there and explained how he obtained this document:
Q Exhibit 1-B before you, Mr. Zelen, tell the Court
what 1-B is.
A It is a letter from a customer, Greg Holden.
Q Who is it directed to?
A To Alan Leonard.
Q Is this one of the documents you faxed to Inspector
Q How did you come to be in possession of Exhibit
A Alan Leonard gave me a bunch of accounts and told
me he couldn't sell them, to see what I could do with
Q Now, the person you know as Alan Leonard, was that
person working at Numisgroup when you started working
Q But you are sure that Alan Leonard gave you — the
person you know as Alan Leonard gave you this
Q And he gave it to you for the purpose of trying to
sell to the customer; is that correct?
Tr. at 166-67.
Govt. Exhibit 1P — a handwritten memo by Zelen faxed to
Farash on January 10, 2000 advising him of "this client George
Barre of Texas." Zelen testified that he learned of Barre from
other companies he worked for in the coin selling industry. He
stated that it was common practice in
the coin industry to swap customer names and phone numbers.
Q How did you learn about George Barre?
A I first got his name from some other companies that
I worked with. And he faxed over a list of his coins,
and the salesman who wanted to do a trade with him
wanted me to price the coins for him.
Q Who was the salesman that George Barre first faxed
his coin list to?
A Nick Masone.
Q Where did Nick Masone receive — work when he
received the fax?
A He worked with myself at different companies.
Q Was he an employee at Numisgroupwhen he received
A He might have been.
Q Now, you said there was an inventory —
THE COURT: Before you leave that, I am somewhat
uncertain how you learned of the name George Barre.
Would you tell us again.
THE WITNESS: A lot of companies were similar
customers at different companies. And different
salespersons would have sold them different coins
when they were with different companies.
THE COURT: And how did you learn about the name
George Barre? Tell me again how you learned that.
THE WITNESS: I learned the name George Barre
when his list of coins was given to me to be
THE COURT: Who gave you the list of coins?
THE WITNESS: Nick had it faxed to my house.
THE COURT: Nick Masone faxed the list to your
THE WITNESS: He spoke to the customer, and the
customer faxed it to me.
THE COURT: Barre faxed it to you?
THE WITNESS: Yes.
THE COURT: To your house?
THE WITNESS: Correct.
THE COURT: That's how you first heard of him?
THE WITNESS: Yes.
I heard the name before, but I just never did
anything with him.
THE COURT: Where did you hear the name before?
THE WITNESS: Different companies I worked at,
he was a player.
THE COURT: Different companies, not Numisgroup?
THE WITNESS: Correct.
THE COURT: Different companies you worked at
THE WITNESS: Correct.
THE COURT: He was a player?
THE WITNESS: He was a buyer. He bought from
everybody who called him.
THE COURT: You may proceed.
MS. JONES: Thank you.
Q How did you know George Barre from before?
A I have heard about his name through the industry,
that he would buy from anybody who called.
Q Through the industry?
A Different coin dealers.
Tr. 169-71, 211.
Govt. Exhibit 1X — "Coin inventory — Barre." Zelen testified
that the document was "Mr. Barre's inventory of coins," as it
states. He testified that the document was faxed to him at his
home by Barre or his wife while he was working for
Numisgroup. In September, 1999 Zelen was selling coins on the
side through his own company known as Certified Rarities.
Govt. Exhibit 1W — handwritten note from Zelen to Farash
dated Sunday, January 10, 2000, containing four names, Phillip
Silverberg, Joe Burno, Don Kopecky and Don Robinson with their
phone numbers. Asked how he obtained their names and numbers.
Zelen responded that these are the names of "big buyers that
four or five different companies had and they were given to me
by different salespeople."
Q Mr. Zelen, what was the reason that these names
were given to you?
A Because they were people that had bought
substantial dollars in coins, and the people that
gave them to me couldn't sell them any more.
Q So, why were you given the name?
A A fresh voice, to try to sell these people.
Tr. at 176.
Govt. Exhibit 1Q — Tuesday, January 18, 2000 advertisements.
Zelen explained that this document was the Numisgroup "January
18" specials for newspaper advertisement. The document was
"placed on every desk" by the sales manager or the person who
designed the ads.
Govt. Exhibit 1R — This was a handwritten note from Zelen to
Farash dated January 18, 2000 and noted "a couple of customers
that bought from Numisgroup," including Roxy Hollingshead, and
their phone numbers. Zelen explained that this is a list of
customers who bought coins from several different companies. The
names were "again, given to me in leads from other salespersons"
while he was working at Numisgroup. The names were given to him
by other salespersons "to try to sell them," and he did speak to
these customers and try to sell them, without success.
Govt. Exhibit 3500-202 — This was a handwritten note from
Zelen to Farash dated January 20, 2000 contained a "list of the
customers' names that I got from several different
salespersons." Among the names on the list was that of John
Pirile. Again, Zelen received these names from other
salespersons so that he could try to sell them.
Govt. Exhibit 1T — "Conversion Specials" Zelen testified
that this was a "coin inventory with specials to sell in
newspaper ads." This document was placed on every salesperson's
desk by the sales manager or by the person who designed the
Govt. Exhibit 1U — The Tuesday, January 28, 2000 newspaper
ads, also put on his desk by the sales manager or the person who
ran the ad.
Govt. Exhibit 1O — "Independent Contractor Agreement" Zelen
testified that he signed this agreement on January 3, 2000. At
that time he did not read the five page printed agreement. He
admitted that he violated the "non-compete" portion of the
agreement in that he did sell customers on his own while he was
working for Numisgroup. He said he sold "probably a dozen or two
dozen" customers outside of his employment with Numisgroup for
substantial amounts. He made these sales with the assistance of
other Numisgroup salespeople.
Zelen testified that he was not given any promise by the
Government, for his appearance at this hearing. However, a
letter had been written on his behalf concerning his sentence in
Zelen testified that, during the time he worked at Numisgroup,
he never went into any locked office to retrieve any documents
or information for Inspector Farash; nor did he go into any
locked room or locked file or any closed drawers; nor was
he directed to do so by Farash. Also, Farash never asked him to
tape record anything, wear a "bug" or photograph or copy
anything, and he complied with these requests.
Zelen left the employ of Numisgroup in February or March 2000.
During the time he worked for Numisgroup he never personally met
Even though Zelen was acting as a government agent while he
was employed as a salesman at Numisgroup, the documents and
information he obtained and related or sent to Farash, did not
constitute an illegal search. The defendants did not possess a
legitimate expectation of privacy as to the documents provided
to Zelen. On the contrary, the documents were voluntarily given
to him or openly displayed to him in plain view as part of his
employment as a salesman. The Court finds that neither Zelen nor
Farash violated the Fourth Amendment, as to an illegal search
and seizure, in any manner. In addition, the names of the
customers were legally obtained by Zelen and related to Farash,
so that the statements in the affidavit in support of the search
warrant were true and were not based on an illegal search and
Accordingly, the motion by the defendants to suppress the
documents obtained by Zelen and transmitted to Farash, as well
as the documents seized as a result of the search warrant, are
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