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.
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")
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 ...