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U.S. v. RW PROFESSIONAL LEASING SERVICES CORP.

August 30, 2005.

UNITED STATES OF AMERICA,
v.
RW PROFESSIONAL LEASING SERVICES CORP., also known as "Professional Leasing Services," ROCHELLE BESSER, also known as "Rochelle Drayer," BARRY DRAYER, ROGER DRAYER, ADAM DRAYER, MYRNA KATZ, STEPHEN BARKER, and PAYADDI SHIVASHANKAR Defendants.



The opinion of the court was delivered by: ARTHUR SPATT, District Judge

MEMORANDUM OF DECISION AND ORDER

This case involves charges of conspiracy to commit bank fraud, wire fraud, and money laundering. Presently before the Court are objections by defendant RW Professional Leasing Services, Corp. ("PLS"), to the Report and Recommendation ("Report") dated June 23, 2004, of United States Magistrate Judge Michael L. Orenstein. The Report recommended that the Court deny the defendants' joint pretrial motion to suppress evidence that was allegedly unlawfully seized from PLS offices by Frank Zambaras ("Zambaras"), who was identified as a confidential source in a subsequent application for a search warrant.

I. BACKGROUND

  A. Procedural History

  The background of this case is incorporated in this Court's three previous memoranda dated May 4, 2004, August 5, 2004, and December 7, 2004. Familiarity with these decisions is assumed. In the May 4, 2004 decision, the defendants' motion to suppress evidence seized by Zambaras was referred to Judge Orenstein to conduct a suppression hearing and report on whether such evidence should be suppressed. On June 22 and 23, 2004, Judge Orenstein conducted a suppression hearing at which Zambaras and Special Agent Rondie Peiscop-Grau of the Federal Bureau of Investigations ("Special Agent Peiscop-Grau") testified.

  At the conclusion of the hearing, Judge Orenstein issued a Report that recommended denying the Defendants' motion to suppress the documents obtained by Zambaras. PLS timely objected to Judge Orenstein's recommendation and argued that Judge Orenstein applied too narrow a legal standard in denying the motion because the court purportedly did not consider whether the government gave "tacit" approval to Zambaras's unlawful conduct.

  B. The Suppression Hearing

  Zambaras testified at the hearing that he was an equipment leasing broker who worked as a contractor for PLS from 1992 to 2002. Zambaras admitted that while working for PLS he was directed by defendant Roger Drayer to fraudulently alter checks. In the beginning of June, 2002, Zambaras notified Roger Drayer that he was terminating his contractual relationship with PLS because it was no longer able to fund his leasing deals.

  Also sometime in early June 2002, Zambaras contacted the FBI and made a complaint about fraudulent activities at PLS. On June 12, 2002, Zambaras met with Special Agent Peiscop-Grau and supplied her with information concerning fraudulent activity at PLS. At the meeting, Zambaras indicated that he had previously removed documents and a CD-ROM from PLS that contained evidence confirming the information about the fraudulent activities. Zambaras testified that Special Agent Peiscop-Grau admonished him for removing property from PLS because he had no authority to take such materials. She further directed him to retain the materials.

  On June 18, 2002, Zambaras and Special Agent Peiscop-Grau met for a second time. At the meeting Zambaras gave her a box containing the records that were discussed at the previous meeting as well as additional records gathered from PLS after the first meeting. Special Agent Peiscop-Grau again admonished Zambaras for removing property from PLS offices. Although both Zambaras and Special Agent Peiscop-Grau testified that she told Zambaras that he was not a government agent and was not authorized to take documents from PLS, she did not refer to this instruction in her "Form 302," which is the form used to memorialize an agent's meeting with an individual.

  On June 20, 2002, Special Agent Peiscop-Grau executed an affidavit in support of an application for a warrant to search PLS's offices, which referred to documents that Zambaras had taken from PLS. On June 21, 2002, the FBI executed the search of PLS offices pursuant to the search warrant obtained. Zambaras was asked to assist, and did assist, the government agents in searching the PLS offices pursuant to the warrant.

  C. Magistrate Judge Orenstein's Report and Recommendation Judge Orenstein found that the taking of the documents and information from PLS after Zambaras met with Special Agent Peiscop-Grau was done while he was acting on his own behalf, and not on behalf of the government. Specifically, Judge Orenstein noted that when Zambaras met with Agent Peiscop-Grau, Zambaras indicated that he had already taken the documents but did not have them with him. Also, during the discussions the agent admonished and warned Zambaras that he was not acting undercover; was not authorized to take documents; and that he did not have any authority to take documents. In response, Zamabaras testified that he knew he had no authority to take documents, but testified that he felt it was critical that he take them so that they would not be destroyed.

  Judge Orenstein concluded that it was immaterial whether Special Agent Peiscop-Grau had knowledge or believed that Zambaras was going to take additional materials from PLS. Instead, Judge Orenstein emphasized that the issue was whether the Special Agent told "him or [did] anything which either required, asked, recruited, requested, encouraged, [or] importuned Zambaras to obtain the documents." Suppression Hr'g Tr. 306-07, June 23, 2004. Judge Orenstein found that "there has not been one shred or scintilla of evidence that the government tacitly involved itself in Mr. Zambaras' independent act of taking documents after June 12, 2002." Hr'g Tr. 307-08. Further, Judge Orenstein found that it was proper for Special Agent Peiscop-Grau to accept the documents from Zambaras, even though they may have been obtained by theft or ...


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