United States District Court, S.D. New York
OPINION & ORDER
J. NATHAN UNITED STATES DISTRICT JUDGE
Benjamin Wey faces an eight-count indictment charging him
with securities fraud, wire fraud, conspiracy to commit
securities and wire fraud, money laundering, and failure to
disclose beneficial ownership of publicly trades companies.
Before the Court is Wey's motion to suppress evidence
seized during Government searches of his residence and the
offices of his consulting firm, New York Global Group, Inc.,
both conducted on January 25, 2012. For the reasons set forth
below, Wey's motion is GRANTED.
charged in an eight-count indictment returned on September 8,
2015. Dkt. No. 2 (the "Indictment"). The Indictment
alleges that between approximately 2007 and 2011, Wey, along
with co-Defendant Seref Dogan Erbek (who remains at large)
and unindicted coconspirators known and unknown, orchestrated
a scheme whereby Wey - through various nonparty entities,
family members, and associates (the "Nominees") -
covertly amassed beneficial ownership of substantial portions
of the equity stock of certain publicly traded companies (the
"Issuers"), manipulated the market price of the
Issuers' stock, liquidated his holdings at artificially
inflated prices, and then laundered millions of dollars in
ill-gotten proceeds. See, e.g., Indictment
¶¶ 7, 13, 18-22.
according to the Indictment, Wey secretly caused the Nominees
to acquire, on his behalf, substantial portions of the shares
of certain U.S.-based over-the-counter-traded shell companies
and then, through his consulting firm New York Global Group,
Inc. ("NYGG") and its alleged affiliate in Beijing,
China, facilitated so-called "reverse merger"
transactions by which China-based operating companies merged
into those shell companies, thus forming new publicly traded
corporations - the Issuers. Id. ¶¶ 8-12.
The Government alleges that the Nominees acquired and
retained, for Wey's benefit, stock in the Issuers by
virtue of their ownership of the target shell companies, and
that these holdings together constituted more than five
percent of the Issuers' outstanding shares. Id.
¶¶ 7, 13. Because Wey, among other things,
purportedly exercised investment authority over the shares
held by the Nominees, he was required to disclose his
beneficial ownership under Section 13(d) of the Securities
Exchange Act of 1934 and Rule 13d-l promulgated thereunder
within ten days of the acquisition of shares in excess of
five percent. Id. ¶ 13. The Government alleges
that Wey was "well aware" of this reporting
requirement but intentionally failed to file the required
disclosures in order to conceal his ownership from the
investing public. Id. ¶ 14.
also, according to the Indictment, caused several of the
Issuers, including SmartHeat, Inc. ("SmartHeat"),
Deer Consumer Products, Inc. ("Deer"), and
CleanTech Innovations, Inc. ("CleanTech"), to apply
for listings on the Nasdaq. Id. ¶-15. In order
to secure approval of these applications, Wey allegedly
engaged in deception to artificially satisfy Nasdaq's
so-called "round-lot" shareholder requirement -
i.e., the requirement that every listed issuer has at least
300 shareholders each owning 100 or more shares of common
stock. Id. ¶¶ 16-17. In particular, Wey
purportedly facilitated deceptive transfers of shares of
Issuer stock from Nominees to other Wey confederates, as well
as issuances of round-lot blocks of shares in the names of
individuals who never actually received such shares or were
otherwise unaware of their ownership. Id.
¶¶ 15 -17.
successfully getting the Issuers listed on Nasdaq, the
Government alleges, Wey proceeded to manipulate the demand
for and price of Issuer stock. This was purportedly
accomplished by, among other things: (i) causing
Manhattan-based retail brokers to solicit their customers to
purchase common stock of the Issuers, often on margin, while
at the same time actively discouraging the sale of such
stock; (ii) instructing Erbek to maintain the share prices of
certain Issuers' stock held in various Nominees'
accounts; and (iii) facilitating match trades in the
Issuers' stock involving Nominees and/or other Wey
confederates. Id. ¶¶ 18-19.
with this market manipulation scheme, the Government alleges,
Wey caused certain Nominees to sell shares of the
Issuers' stock at artificially inflated prices.
Id. ¶ 20. Wey then purportedly laundered the
proceeds of these sales by causing them to be transferred
from accounts located in the U.S. to Nominees' accounts
located overseas, including in Switzerland and Hong Kong,
before being repatriated back to the U.S. and into accounts
controlled by Wey and his wife or otherwise held for
Wey's benefit. Id. ¶¶ 20-22.
charged with one count of conspiracy to commit securities
fraud and wire fraud under 18 U.S.C. § 371; one count of
securities fraud under Section 10(b) of the Exchange Act and
Rule 10b-5 promulgated thereunder, 15 U.S.C. §§
78j(b) & 78ff, 17 C.F.R. § 240.10b-5; one count of
securities fraud under 18 U.S.C. § 1348; one count of
wire fraud under 18 U.S.C. § 1343 ("Count
Four"); two counts - concerning Deer and CleanTech
stock, respectively - of failure to disclose ownership in
excess of five percent of a covered class of equity
securities under Section 13(d) of the Exchange Act and Rule
13d-l, 15 U.S.C. §§ 78m(d) & 78ff, 17 C.F.R.
§ 240.13d-l; one count of money laundering under 18
U.S.C. § 1956(a)(1)(B)(i); and one count of money
laundering under 18 U.S.C. § 1956(a)(2)(A). See
Indictment ¶¶ 23-40.
The Search Warrant Affidavits
Affidavit Concerning NYGG's Offices
January 24, 2012, Special Agent Matthew F. Komar of the
Federal Bureau of Investigation ("FBI") swore out
an affidavit in support of an application for a warrant to
search NYGG's Manhattan offices located at 40 Wall
Street, Suite 3800. See July 8, 2016 Declaration of
Matthew F. Komar Ex. 1, Dkt. No. 54-1 (the "Komar
Affidavit" or "Komar Aff"). The Komar
Affidavit described an ongoing FBI investigation of Wey,
Wey's sister (a Chinese citizen apparently employed by
NYGG or its purported Beijing-based counterpart), and NYGG
itself- which it characterized as a "corporate advisory
firm" founded by Wey in approximately 2004 that
specialized in "introducing middle-market Chinese
operating companies to the U.S. capital markets."
See, e.g., Komar Aff. ¶¶ 2-7, 16. It
asserted that there was probable cause to believe that
fruits, instrumentalities, and evidence of violations of the
federal securities, mail, and wire fraud laws were located
within the subject premises. See, e.g., Id.
on the investigation to date, including information obtained
from current and former NYGG employees, the Komar Affidavit
detailed a suspected "fraud and market manipulation
scheme" perpetuated by Wey, acting through NYGG and
other entities. See, e.g., Id. ¶¶ 4-14.
Komar's description of the purported scheme broadly
tracked, in substantial measure, the allegations set forth in
the Indictment and discussed above. As outlined in the Komar
Affidavit, the scheme involved Wey retaining undisclosed
beneficial ownership of Issuers created through reverse
merger transactions facilitated by NYGG and then artificially
inflating the Issuers' round-lot shareholder bases to
secure Nasdaq listings and manipulating demand for the
Issuers' stock by encouraging a "a hand-picked team
of retail stock brokers" to "aggressively solicit
purchases" of the Issuers' securities. Wey would
then, according to the Affidavit, effectuate the sale of
Nominee-held shares at inflated prices and launder the
proceeds, including through fund transfers to Wey's wife.
See, e.g., Id. ¶¶ 8-14, 18-29.
its length, the Komar Affidavit is notable for its focus on
Wey's connection to a handful of specific companies. Like
the Indictment, the Komar Affidavit principally addressed
SmartHeat, Deer, and CleanTech. Id. ¶¶
11-12, 18-20, 35-36. With respect to SmartHeat and Deer, the
Affidavit discussed particular purported misrepresentations
made by the Issuers, and by Wey, to Nasdaq in the course of
the listing application process and described serial
transactions by which Wey allegedly inflated the Issuers'
round-lot shareholder bases in 2008 and 2009. Id.
¶¶ 18-19. It further set out alleged market
manipulation tactics undertaken in 2009 through 2010 by the
broker group over which Wey purportedly exercised influence,
including improper high-pressure promotion of Issuer
securities and misrepresentations concerning the future value
of the stocks. Id. ¶¶ 20-25. A $350, 000
kickback allegedly paid to the broker group in connection
with its promotion of Deer, at least, was described in some
detail. Id. ¶ 26. The Affidavit also discussed,
to some extent on a transaction-level basis, the
Nominees' sales, in 2009 and 2010, of large blocks of
Issuer shares at purportedly inflated prices and the wiring
of the sale proceeds to accounts linked to Wey * confederates
and family members in Switzerland and Hong Kong and,
ultimately, back to the U.S. Id. ¶¶ 27-29.
CleanTech, the Affidavit described Wey's purported
facilitation in 2010 and 2011 of the placement of Issuer
stock with individuals and entities formerly used as Nominees
with respect to Deer and SmartHeat. Id. ¶ 36.
It also identified documents allegedly demonstrating
Wey's indirect control over CleanTech, and discussed
Nasdaq's decision to delist CleanTech based on its
alleged failure to disclose materials revealing its financial
connection to Wey. Id. The Affidavit further
recounted information from an FBI source within NYGG
suggesting that Wey facilitated CleanTech management's
preparation of inflated revenue forecasts, and identified a
pattern of active trading in CleanTech stock by Wey's
alleged retail broker team. Id.
note, the Komar Affidavit also identified by name dozens of
individuals and entities potentially involved, directly or
indirectly, in Wey's suspected schemes. These included,
among others, the U.S.-based broker-dealer team purportedly
working at Wey's direction and several firms at which its
members were employed, senior employees of the Issuers,
suspected Nominees and other Wey associates and family
members in both the United States and China, and NYGG
personnel. Id. ¶¶ 12, 14, 18-19, 24,
26-29, 33, 36.
Affidavit also connected Wey, more briefly, to several other
specific companies of evident interest to the Government. It
described, for example, Wey's and NYGG's facilitation
of a reverse merger transaction involving Bodisen Biotech,
Inc., as well as that company's subsequent delisting by
the then-American Stock Exchange for, among other things,
failure to properly disclose its relationship with and
payments to NYGG. Id. ¶ 17. It also recounted
Wey's alleged involvement in an accounting fraud scheme
perpetuated by AgFeed Industries, Inc., a publicly-traded
company born of another reverse merger transaction
purportedly facilitated by Wey, and large-scale sales of
AgFeed stock by investors believed to be Wey Nominees.
Id. ¶¶ 30-34. Finally, the Affidavit
asserted that Wey exercised undisclosed control over Nova
Lifestyle, Inc. (yet another product of a Wey-linked reverse
merger transaction), that he wielded that control to
effectuate share transfers to Nominees, and that he directed
NYGG employees to improperly solicit purchases of the
company's stock. Id. ¶ 37.
addition, the Komar Affidavit included a short section
devoted to Wey's personal background and alleged history
of participating in fraudulent activities, including within
the securities industry. It asserted, among other things,
that Wey was sanctioned by both the Oklahoma Department of
Securities and then-National Association of Securities
Dealers based on misconduct during Wey's time working as
a registered investment adviser in Oklahoma in the mid to
late 1990s and early 2000s. It further averred that Wey
engaged in various forms of tax and other financial fraud and
forgery during roughly the same period. Id. ¶
on these submissions, and as discussed further below, the
Komar Affidavit formally requested permission to seize from
NYGG's offices twelve expansive categories of materials
set forth on an appended exhibit, with the limitation that
the materials concern at least one of an independently
appended list of approximately 220 named individuals and
entities believed to be in some way connected to Wey's
purported scheme. Id. ¶¶ 35, 38-42, 46-47,
Exs. A-B. It also sought court approval to seize, copy,
and/or digitally image computers and related electronic
equipment believed to contain such materials and to conduct
offsite searches of the devices' contents. According to
the Komar Affidavit, in view of the highly technical and
specialized procedures and substantial time investment
required to effect thorough searches of the potentially
voluminous data contained within this equipment - including
"deleted, concealed, or encrypted files - and extract
relevant material while maintaining the integrity of the
evidence, it would in many cases be impractical, if not
impossible, to effectively do so onsite. Id.
¶¶ 43-47, Ex. C. As such, the Affidavit attached a
third exhibit setting forth a proposed methodology for
reviewing and seizing such equipment and, if necessary,
executing offsite searches. Id. Ex. C.
Affidavit Concerning Wey's Residence
discussed further below, during the course of the
Government's search of the NYGG offices the following
day, it decided to apply for a warrant to search the
Manhattan apartment that Wey shared with his wife, Michaela,
and their children (the "Wey Apartment").
Accordingly, on January 25, 2012, Special Agent Keith Garwood
of the FBI swore out another affidavit. See July 8,
2016 Declaration of Matthew F. Komar Ex. 4, Dkt. No. 54-4
(the "Garwood Affidavit" or "Garwood
Aff"). The Garwood Affidavit - which relied heavily upon
and expressly incorporated by reference the Komar Affidavit -
explained that FBI personnel had interviewed NYGG employees
during the search of the firm's offices earlier that day
and learned that Michaela Wey served as NYGG's
"office manager" and "bookkeeper" but
generally worked out of the Wey Apartment, where she would,
among other things, perform accounting and payroll functions
and mail checks. Garwood Aff. ¶¶ 2, 7-11. It also
cited assertions in the Komar Affidavit that Wey caused
certain Issuer stock certificates for new round-lot
shareholders to be sent to the Wey Apartment, that certain
Nominees had wired substantial sums of money to accounts held
in the name of Michaela Wey, and that Michaela Wey had once
been listed in an SEC filing as an executive officer of NYGG.
Id. ¶¶ 6, 9, 12.
on that information, the Garwood Affidavit urged that there
was probable cause to believe that fruits, instrumentalities,
and evidence of securities, mail, and wire fraud would be
found within the Wey Apartment and sought permission to seize
from the Apartment substantially the same categories of
materials, pertaining to substantially the same individuals
and entities, listed in the Komar Affidavit. Garwood Aff.
¶ 4, 13-16, 20, Exs. A-B. It also sought approval of
substantially the same protocol as that proposed in the Komar
Affidavit for searching computers and related equipment
offsite, citing similar practicality concerns. Id.
17-20, Ex. C.
The Search Warrants
States Magistrate Judge Michael H. Dolinger approved the
Government's application with respect to the NYGG offices
and issued a corresponding search warrant on January 24,
2012. See May 27, 2016 Declaration of David Siegal
("Siegal Dec") Ex. 8, Dkt. No. 46-9 (the "NYGG
Warrant"). The NYGG Warrant identified the premises to
be searched as "[t]he office of [NYGG] at 40 Wall
Street, 38th Floor, Suite 3800, New York, New York, and any
closed or locked cabinets, briefcases, and other containers
kept therein, including computers and electronic storage
devices, excluding the individual office of James Baxter,
Esq." Id. Ex. A.
property to be seized pursuant to the NYGG Warrant was
defined through the interplay between two attached exhibits
(both of which had originally been included in the
Government's application in substantially identical
form). Specifically, Exhibit A to the NYGG Warrant set forth,
by category, the types of materials subject to seizure along
with illustrative lists, and imposed the additional
requirement that the actual materials to be seized relate in
some way to at least one of a list of individuals and
entities included in Exhibit B. The scope of Exhibit A is
best illustrated by reproducing it in full, with top-line
categories emphasized relative to their non-exhaustive
supporting lists, as applicable:
1. Financial records concerning the individuals and entities
listed in Exhibit B . . . including banking and brokerage
firm account statements, checks, and transactions records,
wire transfer instructions and similar documents concerning
or reflecting movements of funds, account and account holder
information, check numbers, account numbers and Federal
Reserve routing numbers;
2. Personal financial records of any individuals named in
Exhibit B or of any employees, agents, or shareholders of any
of the entities listed in Exhibit B, including banking and
brokerage firm account statements, checks, and transaction
records, wire transfer instructions and similar documents
concerning or reflecting movements of funds, account and
account holder information, check numbers, account numbers
and Federal Reserve routing numbers;
3. Telephone bills, telephone message pads, notes, memoranda
and other records of internal and external communications
between, among, or relating to any of the individuals and
entities listed in Exhibit B;
4. Correspondence, audio tapes, and video tapes concerning
any of the individuals and entities listed in Exhibit B;
5. Hotel, airline and credit card receipts reflecting the
dates and locations of meetings or travel to meetings
concerning any of the individuals and entities listed in
6. Photographs, address books, Rolodexes, diaries, income tax
returns and calendars concerning the operations and
management of any of the individuals and entities listed in
7. Computers, flash drives, internal and external hard
drives, diskettes and other magnetic storage media, and
files, data and information contained thereon, used to store
names, telephone numbers and addresses, and other
information, including but not limited to personal digital
assistants such as iPhones, iPads, Blackberrys, smartphones,
and cellphones, as well as drafts and final versions of
documents and correspondence, used by, or used in connection
with the individuals and entities listed in Exhibit B. . . .;
8. Marketing materials relating to any of the individuals and
entities listed in Exhibit B, including offering materials,
private placement memoranda, sales scripts, investor
"lead" lists, investment agreements, financial
statements, and other documents concerning, [or] relating to,
the purchase or sale of securities;
9. Documents identifying shareholders or investors in the
entities listed in Exhibit B, including transfer agent
records, stock certificates, investor lists, investor files,
investment subscription agreements, copies of checks received
from or sent to investors, copies of account statements sent
to investors, copies of correspondence sent to or received
from investors, Federal Express, DHL or other records
reflecting mailings by private commercial carriers and the
U.S. Postal Service, and other documents concerning or
reflecting the identities and participation of investors in
10. Documents reflecting the ownership by the individuals and
entities listed in Exhibit B of real properties and personal
property purchased with the proceeds of fraud, including but
not limited to houses, apartments, cars, boats, and jewelry,
including purchase and sale agreements, deeds, mortgage
documents, and other real estate or other property closing
11. Identification documents and other documents which may
reflect the identities of persons listed in Exhibit B or
persons affiliated with the entities listed in Exhibit B; and
12. Corporate documents reflecting the ownership or structure
of, or relationship between and among, any of the entities
listed in Exhibit B, including incorporation documents,
inter-company agreements, lists of partners and stockholders,
organizational charts, and corporate resolutions and bylaws.
Warrant Ex. A.
B to the NYGG Warrant, in turn, named the same approximately
220 individuals and entities identified in Exhibit B to the
Komar Affidavit. Of great significance, the list included
among its first two entries NYGG itself (whose offices, of
course, would be the subject of the search) and Wey himself.
See NYGG Warrant Ex. B. Reading Exhibits A and B
together, then, the NYGG Warrant authorized the seizure from
NYGG's offices of, for example, all "financial
records, " "internal and external communications,
" "correspondence, " and other things
the requirement that the materials subject to seizure relate
to at least one of the Exhibit B individuals/entities, the
NYGG Warrant imposed no substantive limitations. It did not
specify the crimes under investigation, whether by statutory
citation or otherwise, or discuss any particular conduct of
interest. It did not set out any date ranges or other
timeframe-based criteria. Importantly, the NYGG Warrant also
did not attach, incorporate, or otherwise expressly reference
the Komar Affidavit.
respect to any "computers, computer-related equipment,
and other electronic devices" found on the premises, the
NYGG Warrant provided that the FBI would employ substantially
the same search and seizure methodology proposed in the Komar
Affidavit, which it described in another attached Exhibit
(essentially, a copy of Exhibit C to the Komar Affidavit).
See NYGG Warrant Exs. A, C. That methodology
contemplated, in sum and substance, that FBI personnel
trained in searching and seizing computer data would conduct
an initial onsite review of any such items. Id. Ex.
C. If a determination were made that a given item could not
be searched onsite "within a reasonable amount of time
and without jeopardizing the ability to preserve data, "
then the FBI could either (i) copy its data for offsite
review (if the device were found not to contain contraband)
or (ii) seize the device for transportation to a law
enforcement laboratory for offsite review (if the device were
found to contain contraband or onsite data review or copying
would be impractical). Id. In searching these items
or their copies, the FBI would be permitted "to examine
all of the data contained" but only "to view their
precise contents and determine whether the data falls within
the items to be seized as set forth" elsewhere in NYGG
Warrant. Id. In other words, the procedures for
searching computer equipment and electronic devices did not
purport to expand or restrict the scope of the materials
subject to seizure; rather, data from these items could
ultimately be seized only if it fell within the
"strictures" - such as they were - of Warrant
Exhibits A and B. During these searches, the FBI would be
required to "have procedures in place to segregate any
potentially privileged materials or files." Id.
If it were determined that any confiscated devices were
"no longer necessary to retrieve and preserve the
data" and that the "items [were] not subject to
seizure pursuant to Federal Rule of Criminal Procedure 41(b),
" the Government would be required to "return these
items, upon request, within a reasonable period of
The Wey Apartment Warrant
Judge Dolinger also approved the Government's application
to search the Wey Apartment, issuing a warrant on January 25,
2012 (during the course of the Government's search of the
NYGG offices, as discussed further below). See
Siegal Dec. Ex. 24, Dkt. No. 46-25 (the "Apartment
Warrant"). Other than its description of the premises to
be searched, the Apartment Warrant was substantially
identical in all material respects to the NYGG Warrant, right
down to its incorporation of copies of the same three
Exhibits. Id. & Exs. A-C. Of particular note in
the context of the forthcoming search of the Wey Apartment,
Exhibit B (the list of relevant individuals and entities)
included not only Wey himself but also Michaela Wey. Thus,
the Apartment Warrant authorized the seizure from the Wey
Apartment of, for example, all "financial records,
" "internal and external communications, "
"correspondence, " "photographs, "
"audio tapes, " and "video tapes"
concerning either of the Apartment's two adult occupants.
Wey filed the instant suppression motion, the Court made a
preliminary determination that a hearing was warranted to
address whether the Government acted in good faith in
executing the NYGG Warrant and the Apartment Warrant and
whether the Government acted reasonably and in good faith in
executing off-site searches of computers and computer-related
equipment recovered during the execution of the Warrants.
Dkt. No. 69. Accordingly, the Court conducted a two-day
suppression hearing on January 23 and January 24, 2017 (the
"Hearing"), at which it heard live testimony from
former Assistant United States Attorney David Massey, Special
Agent Komar, Special Agent Thomas McGuire, Special Agent
Elizabeth Miller, forensic examiner and information
technology specialist Brian Booth.
follows for the remainder of this Opinion constitutes the
Court's findings of fact and conclusions of law. They are
based upon the evidence taken at the hearing - with the
benefit of supplemental post-hearing briefing and oral
argument - as well additional evidentiary submissions by the
parties in support of their original and supplemental briefs.
Preparation for the NYGG Search
Government's investigation into Wey and NYGG was already
at least several months old when the Government applied for
the NYGG Warrant on January 24, 2012. Hearing Tr. 30:11-14.
The investigation was led, during that period of time, by
Agent Komar and then-AUSA David Massey. Hearing Tr. 14:16-20,
29:9-12, 120:11-15. AUSA Massey testified that the decision
to apply for the NYGG Warrant was made "at least"
several weeks - and "perhaps" even months - before
the Government submitted its application. Id. at
preparation for the Government's search of the NYGG
offices, Agent Komar prepared an "operations order
form" for circulation to the FBI search team (the
"Operations Order"), which was comprised of
approximately twenty agents predominantly from the C-43
securities fraud squad and/or the Computer Analysis Response
Team ("CART"), along with personnel from the
FBI's photography unit. Hearing Tr. 119:21-120:2,
122:10-123:16, 185:18-186:5, 236:22-237:4; Gov't Exs. 1
(Operations Order), 5 (FBI Crime Scene Sign-In Log for Search
of NYGG). The Operations Order contained a "synopsis of
the case, " authored by Komar, which asserted that there
was probable cause to believe that Wey, acting through NYGG,
had "committed securities fraud and manipulated the
market for the securities of various small-capitalization
issuers." Hearing Tr. 122:25-123:4; Gov't Ex. 1 at
1. The Operations Order then proceeded to outline in a brief
paragraph the basic contours of the suspected scheme,
substantially consistent with the Komar Affidavit:
Wey introduces Chinese companies to the U.S. markets and
arranges reverse mergers and assists these companies [in]
get[ting] listed on markets such as Nasdaq. It appears he has
artificially inflated the number of round-lot shareholders
for the purpose of meeting listing requirements. Wey then
retains undisclosed beneficial ownership and/or control of
large blocks of shares of the Chinese companies that are held
in the name of nominees. Wey creates an artificial demand for
the securities by working directly with a hand-picked team of
retail stock brokers ... to aggressively solicit purchases of
the Chinese companies' securities. Once the artificial
demand is created and the stock price goes up, Wey sells the
large block of nominee held shares.
Id. In a separate section, the Operations Order
described the forthcoming operation as a search "for
documents related to Wey assisting Chinese reverse mergers
[to] falsify their records to meet listing standards for
Nasdaq" and "control[ing] the trading volume in
these Chinese companies, through a number of associated
broker dealers." Id. at 5. The Operations Order
did not reference or name any of the specific Issuers
implicated in Wey's alleged scheme. Nor did it discuss
any of the entities or individuals listed on Exhibit B to the
NYGG Warrant (apart from NYGG and Wey) or explain their
purported connections to the suspected criminal activities.
the afternoon of January 24, 2012 - the same day that the
NYGG Warrant issued and the day before it was to be executed
- Agent Komar and AUSA Massey conducted a pre-operation
briefing attended by all members of the FBI search team.
Hearing Tr. 15:6-16:3, 122:1-4, 123:19-124:-2. The briefing
lasted approximately 45 minutes to an hour. Id.
240:24-25. During the briefing, AUSA Massey explained the
nature of the scheme under investigation, using the Komar
Affidavit as a reference, and described the "types of
documents" that the team would be "looking
for." Id. 68:25-71:17, 124:11-15; 239:7-21.
Agent Komar summarized "some parts" of the
investigation to date but primarily briefed the team on
operational logistics for the coming search. Id.
124:19-23. Special Agent Thomas Maguire - who attended the
briefing, participated in the search of the NYGG offices, and
later took over for Agent Komar as the case agent on the Wey
investigation - characterized the briefing as providing a
"big-picture overview" of what was presented as a
"fairly typical securities fraud case."
Id. at 239:17-21.
Hearing, Agent Komar could not recall any instructions or
guidance provided to the search team as to any sorts of items
that should not be seized during the forthcoming
search. Id. 190:13-16. The team was instructed,
however, that the office of NYGG's in-house legal counsel
was off-limits and could not be searched during the
operation. Id. 239:22-240:2.
during the pre-search briefing, Agent Komar shared copies of
the Operations Order with each member of the search team, and
communicated to the team that the NYGG Warrant and the Komar
Affidavit were "available" if anyone would like to
review them personally. Id. 123:15-16, 125:2-126:6,
240:6-22. There is no credible evidence, however, that any
agent other than Komar himself did in fact review the Komar
Affidavit in advance of the search. Agent Komar testified
that he "did not hand out copies" of the Komar
Affidavit to the team, and "did not make sure every
single person read" it. Id. 125:13-126:4. In
addition, while Komar first testified at the Hearing to his
vague belief that he at some point e-mailed the Komar
Affidavit to members of the FBI team, subsequent searches by
the Government identified no such e-mail communications.
Id. 125:13-22, 228:14-230:4. AUSA Massey, for his
part, expressed "doubt" that he read any portion of
the Komar Affidavit directly to the search team. Id.
68:25-71:17. Agent Komar testified generally that at least
one (unidentified) member of the search team did in fact
review some portion of the Komar Affidavit; AUSA Massey, on
the other hand, had no such recollections. Id.
68:25-71:17, 126:5-7, 185:12-20. The Government called no
witnesses-other than Komar himself- who could definitively
testify that they personally reviewed the Komar Affidavit
prior to the search operation, and the Court cannot find that
any such review took place.
Komar conceded at the Hearing that the planned search of the
NYGG offices could have been scheduled on any date up to 10
days after the briefing to afford all members of the search
team an opportunity to review the Komar Affidavit, but that
the FBI elected to go forward with the search the following
morning. Id. 186:6-25.
Search of NYGG Offices
morning of January 25, 2012, the search team assembled for a
final pre-operation briefing at the FBI's Manhattan
offices to discuss logistics for the search. Hearing Tr.
126:10-16. AUSA Massey did not attend that meeting.
search of the NYGG offices (the "NYGG Search")
began shortly before 9:30 AM. Id. 126:19-127:1;
Gov't Ex. 5. NYGG's suite consisted of an outer
reception area surrounded on two sides by approximately nine
individual offices, conference rooms, and a kitchen, together
forming an "L" shape. Gov't Ex. 4 (NYGG Office
Layout Diagram); Hearing Tr. 243:13-16. Wey and all other
NYGG employees present in the office when the NYGG Search
began were gathered into one of the conference rooms by FBI
personnel and interviewed briefly to obtain basic contact
information and background on their roles at NYGG. Hearing
Tr. 127:4-9, 131:21-132:8, 243:18-23. Members of the FBI
search team had copies of the NYGG Warrant, including its
attachments, with them onsite, id. 127:23-25,
244:13-18, but there is no evidence that anyone other than
Komar himself had a copy of the Komar Affidavit. Neither Wey
nor any other employee on the scene was provided with a copy
of the Komar Affidavit. Id. 46:8-17.
Komar, serving as the team leader, personally searched the
reception area in the outer portion of the office and then
remained in that area, ostensibly to field any questions from
other agents. Although Komar himself testified generally that
team members asked him questions on several occasions, he
recalled only one specific inquiry as to whether a particular
document fell within the scope of the NYGG Warrant.
Id. 128:1-19, 130:7-131:6, 132:9-10. The Government
presented no other evidence at the Hearing suggesting that
the searching agents addressed questions to Agent Komar. The
Court is likewise aware of no evidence that Agent Komar in
any way directly supervised, reviewed, or spot-checked the
team's seizure decisions.
Massey was not onsite during the NYGG Search but communicated
during the course of the Search with, at least, Agent Komar.
Id. 16:4-8. At the Hearing, AUSA Massey could not
recall having any discussions with Agent Komar or his team as
to whether particular items fell within the scope of the NYGG
Warrant, and agreed that it was generally up to the searching
agents' "discretion" to make any such
determinations. Hearing Tr. 67:18-68:20. From his own
perspective, AUSA Massey testified, "all records of
[NYGG] ... were in play, " id. 14:8-10, largely
because the Government "needed to understand the entire
business, even if some part of the business was legitimate,
" in order to properly assess its role as a source of
income to Wey, see, e.g., Id. 36:1-12 (citing
Government's suspicion that Wey was "making way too
much money to be accounted for by [NYGG's advisory
fees])." When pressed to cite any types of materials
not, in his view, covered by the NYGG Warrant, AUSA
Massey offered only medical prescriptions, illegal drugs and
paraphernalia, child pornography, and terrorist manifestos.
Id. at 47:17-48:10. (Although Massey also later
testified that he would deem "a bag of heroin ... found
on the premises" that "said New York Global
Group" on it "within the scope of the
warrant." Id. 50:13-16.)
twelve or thirteen of Komar's colleagues conducted the
physical searches of NYGG's individual offices and other
rooms. See, e.g., Id. 127:10-22, 243:24-244:9;
Gov't Ex. 1; Gov't Ex 5. Of these agents, only Agent
McGuire testified at the Hearing. Agent McGuire recalled
personally searching one of NYGG's "larger"
individual offices and deciding whether to seize documents by
comparing their contents to the list of individuals and
entities set forth in Exhibit B to the NYGG Warrant (which,
of course, included NYGG itself). He testified that, while it
was possible that he sought a second opinion from another
agent on the search team at some point, he did not recall
"coming across documents where [he] had a difficult time
determining whether it was covered by the search
warrant." Id. 243:17-247:23. Asked whether he
remembered deciding not to seize any particular
materials, Agent McGuire testified that he recalled
determining that a set of resumes belonging to people who
were apparently applying for jobs at NYGG were "not
pertinent to the investigation." Id.
245:18-248:19. He also testified that he made that
determination without consulting any of his colleagues,
agreeing that it was a "clear decision" that such
documents were "not responsive." Id.
298:13-299:1. Notwithstanding Agent McGuire's conclusion,
resumes of NYGG applicants (whose names did not appear in the
NYGG Warrant or Komar Affidavit) were in fact seized during
the course of the NYGG Search. See, e.g.,
Supplemental Memorandum of Law in Support of Defendant
Benjamin Wey's Motion to Suppress, Dkt. No. 95
("Def. Supp. Br.") Ex. B.
to Agent Komar, the total volume of paper records found in
the NYGG offices was - consistent with the Government's
expectations going in - less than substantial. Id.
133:14-134:13. He testified that the team had sufficient time
during the NYGG Search to review essentially every page of
every document found, and estimated that, in total, the team
ultimately seized approximately 4, 500 pages of hard-copy
documents. Id.; see also Gov't Ex. 6 (Evidence
Recovery Log from NYGG Search noting seizure of approximately
thirteen redwelds, boxes, envelopes, and discs). Komar
personally recovered only one redweld of documents; the
balance was seized by other members of the search team.
Gov't Ex. 6. Asked at the Hearing to compare the
hard-copy search fruits to the overall volume of paper
records found or reviewed, Agent Komar could not provide
specifics but testified: "We didn't take every
single piece of paper, but there really wasn't much paper
to start with either." Hearing Tr. 134:5-13.
equipment and electronic devices found during the NYGG Search
were assessed by CART personnel to determine whether onsite
searches or data copying would be feasible. Id.
134:14-135:13. The team ultimately deemed these options
impractical with respect to the vast majority of the items.
Id.; see also Gov't Ex. 7 (CART On-Site Search
Form for NYGG Search). With the exception of Wey's cell
phone, which the search team seized, CART personnel copied or
digitally imaged the cell phones of all NYGG employees
present in the office during the NYGG Search. The balance of
the electronic materials found, however, including all laptop
computers, flash drives, and hard drives from desktop
computers, were seized for offsite review. Hearing Tr.
134:14-135:13, 175:22-177:6; Gov't Ex. 7. In total, the
team copied or seized approximately 24 pieces of computer or
other electronic equipment. Gov't Ex. 7. With respect to
NYGG employees' cell phones, at least, the search team
did not make any onsite determination as to whether the
devices related in any way to the individuals and entities
set forth in Exhibit B to the NYGG Warrant; rather, the cell
phones of all those present in the office were
indiscriminately imaged (or seized) for later review. Hearing
NYGG Search lasted approximately four to five hours,
concluding shortly before 3:00 PM. Hearing Tr. at 181:7-9;
Gov't Ex. 5.
Search of Wey Apartment
time it applied for the NYGG Warrant, the Government had
reason to believe, at least, that stock certificates
potentially implicated in Wey's purported scheme had at
some point been sent to the Wey Apartment. Hearing Tr.
181:24-l 82:11 (Agent Komar acknowledging that the Komar
Affidavit asserted as much). It did not, however, seek a
search warrant for that location until the NYGG Search was in
progress. Id. As alluded to above, at some point
during the "early stages" of the NYGG Search, Agent
Garwood of the FBI learned from interviews of NYGG employees
that Michaela Wey served as NYGG's bookkeeper and office
manager and generally completed her work from the Wey
Apartment. Hearing Tr. 16:15-25, 135:14-24, 182:8-11. Upon
receiving that additional information and with the NYGG
Search having turned up none of the stock certificates of
interest, AUSA Massey, along with Agent Garwood, drafted the
Garwood Affidavit and applied for the Apartment Warrant.
Hearing Tr. 17:1-18, 135:25-136:5, 181:10-183:23.
the application process in motion, Agent Komar instructed FBI
personnel, including several agents already onsite at the Wey
Apartment, to serve grand jury subpoenas on Michaela Wey, to
secure the exterior of the Wey Apartment in order to ensure
that no evidence would be removed or discarded. Hearing Tr.
136:6-13, 138:15-20, 253:9-254:7; Def. Ex. 16 (February 22,
2012 Memorandum of Agent Komar). The Court is aware of no
evidence, however, that Komar or anyone else had any basis to
believe that such activities were likely to take place.
the Apartment Warrant issued, FBI personnel entered the Wey
Apartment at approximately 4:30 PM and commenced a search
(the "Apartment Search"). Hearing Tr. 138:8-24,
254:8-18; Gov't Ex. 12 (FBI Crime Scene Sign-In Log for
Apartment Search); Def. Ex. 16. Ultimately, approximately
seventeen FBI agents participated in the Apartment Search in
some capacity. Gov't Ex. 12. Most, but not all, of these
individuals had also participated in the NYGG Search.
Compare Gov't Ex. 5 with Gov't Ex.
12. No pre-operation briefing was conducted in advance of the
Apartment Search. Hearing Tr. 300:18-20. There is also no
evidence that any operations order or similar document was
prepared to help guide the team in executing that Search.
McGuire, who conducted an initial walkthrough at the outset
of the Apartment Search, testified that he
"briefly" reviewed the Apartment Warrant before
beginning the Apartment Search. Id. 254:12-25,
257:2-9. He did not, however, review the Garwood Affidavit,
and testified that he was not aware of any FBI personnel
possessing a copy of the Garwood Affidavit during the course
of the Apartment Search. Id. 301:3-10. Agent McGuire
testified repeatedly that, to his understanding at least, the
team was authorized to seize from the Wey Apartment, among
other things, "any record we would find related to [Wey]
finances, " regardless "of date or time
frame." Hearing Tr. 276:12-20, 304:11-14, 306:18-19.
again, Agent Komar, who arrived on the scene at approximately
4:50 PM, functioned as the team leader during the Apartment
Search. Hearing Tr. 138:25-139:l;Gov't Ex. 12. And once
again, Agent Komar testified generally at the Hearing that he
was asked unspecified questions by unnamed agents about
whether unidentified documents were "relevant to the
search warrant." Hearing Tr. 139:2-139:10. As in the
context of the NYGG Search, however, the Government called no
members of the search team who could testify to having
consulted Komar with respect to seizure decisions.
the Wey Apartment, the search team identified one
"office area" with a "large amount of
documents, " but otherwise did not locate any rooms with
a "substantial" number of hard-copy documents.
Hearing Tr. 139:5-140:3. Agent Komar personally assisted in
searching "what appeared to be a guest room" and
the rooms of Wey's children and then "focused [the
team's] attention on the office area." Id.
139:14-25. AUSA Massey, once again, was not onsite for the
Apartment Search, but did ...