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United States of America v. Donna Levy

November 16, 2012


The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge:


DOC #: _________________



Donna Levy ("Mrs. Levy") and David Levy ("Mr. Levy," collectively "Defendants") move pursuant to 18 U.S.C. § 2518(10) and Franks v. Delaware, 438 U.S. 154 (1978), to suppress all evidence of their communications intercepted by the Government, and any evidence derived therefrom, over wiretaps authorized pursuant to Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510--22 ("Title III"), and for a Franks hearing.

Defendants argue that the Government failed to meet its burden of proving the "necessity" for the wiretaps under 18 U.S.C. § 2518(3)(c), that the judges who authorized the wiretaps were misled by the Government's applications, and that all evidence derived as a result of the wiretaps should be excluded as "fruit of the poisonous tree."

Defendants' arguments fail. In light of the considerable deference the Court must grant to the decisions of the District Courts that approved the wiretaps, Defendants have failed to show that the Government's applications did not satisfy the statutory requirement of necessity. Nor have Defendants made the substantial preliminary showing that the Government's applications contained misleading misstatements or omissions necessary to justify a Franks hearing.

For the reasons set forth below, Defendants' motion to suppress the evidence derived from the wiretaps or, in the alternative, convene a Franks hearing, is DENIED.


Defendants are charged with securities fraud, wire fraud, conspiracy to commit securities and wire fraud, and money laundering under a multiple-count superseding indictment. (ECF No. 188.) The superseding indictment alleges that Defendants defrauded founders and executives of, and investors in, several start-up companies by improperly obtaining shares of such companies, distributing misleading information about such companies to the public to artificially inflate the value of their shares, and then selling those shares into the market at manipulated valuations.

The Government's evidence includes approximately ten telephone conversations and fourteen voice messages involving Mrs. Levy (see Def. Donna Levy's Mem. of Law. in Supp. of Mot. to Suppress (June 13, 2012) ("Def. Mem."), ECF No. 198 at 7), and at least two telephone conversations involving Mr. Levy (see Statement of David Levy in Supp. of Mot. to Suppress (Oct. 17, 2012)), which were obtained from three wiretaps authorized pursuant to Title III.

The wiretaps at issue arose out of a multi-year investigation into illegal activity at the Port of New York and New Jersey by a special Task Force comprised of agents from the Drug Enforcement Agency, Internal Revenue Service, and Immigration and Customs Enforcement that, as of March 2010, was investigating narcotics trafficking at the Port, during which it had uncovered evidence of other crimes, including stock and wire fraud, union bribery, and extortion. (Def. Ex. 2, Mar. 23, 2010 Affir. at 2; id. ¶ 16.) As part of the narcotics trafficking investigations, the Task Force cultivated a cooperating witnesses, a Port employee identified as CW-3, who assisted with the development of that investigation and ultimately helped identify an alleged "pump and dump" stock fraud scheme at the Port. (Id. ¶¶ 16, 40--44.)

CW-3 brought to the Task Force's attention the activities of another Port employee, who then, in addition to those persons suspected of participation in the narcotics trafficking, became a target of the Government's investigation and, ultimately, wiretapping (the "Target"). (Id. ¶¶ 40-- 44.) According to CW-3, the Target had previously solicited money from CW-3 and other Port employees to invest with the promise that the employees would make money; however, the employees had lost almost all the money the Target had received from them. (Id. ¶¶ 40--41.)

The information CW-3 provided about the Target's previous activities was corroborated and further developed by the Task Force's review of bank records and other information from a fraud investigator at TD Ameritrade, the brokerage firm where the Target operated investment accounts. (Id. ¶¶ 42--44.) A 2008 TD Ameritrade investigation indicated that the Target and another individual were using several accounts to heavily trade "penny" stocks with approximately 40 other accounts identified as belonging to individuals employed in the maritime shipping industry in the New York metropolitan area. (Id. ¶ 42.) These activities produced approximately $1.2 million in profits for the Target and the other individual involved. (Id. ¶ ...

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