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United States v. Shulaya

United States District Court, S.D. New York

December 20, 2017

UNITED STATES OF AMERICA,
v.
RAZHDEN SHULAYA, et al. Defendants.

          OPINION & ORDER

          KATHERINE B. FORREST United States District Judge.

         On June 7, 2017, Razhden Shulaya, Zurab Dzhanashvili, and thirty-one others were charged with a variety of racketeering, fraud, narcotics, firearms, and stolen property offenses; many, including Shulaya and Dzhanashvili, were arrested on the same day. The defendants-most of whom were born in the former Soviet Union and maintain substantial ties to Georgia, the Ukraine, and Russia-are alleged to be members of the “Shulaya Enterprise, ” an organized criminal group under Shulaya's command. According to the Indictment, the Enterprise is based in New York City but runs operations throughout the United States and abroad. The activities described in the Indictment include, inter alia, illegal gambling, extortion of those who owed debts to the Shulaya Enterprise, trafficking in contraband cigarettes and stolen merchandise, efforts to defraud casinos, identity theft, and use of violence.

         Defendants are charged with: racketeering conspiracy; conspiracy to sell and transport stolen goods; conspiracy to traffic contraband tobacco; conspiracy to commit fraud relating to identification documents; wire fraud conspiracy; narcotics conspiracy; and obstruction of justice.

         Pending before the Court is a series of pretrial motions seeking suppression of evidence (based on purportedly improper communications interceptions and geolocation tracking), dismissal of Count IV, and routine pretrial disclosures. (See generally ECF Nos. 385, 388, 389, 391, 397, 398, 399, 400, 401, 402, 403, 404, 405, 406, 413, and 420.) None of the motions requires resolution of a disputed issue of fact and thus the Court has not held an evidentiary hearing.

         Zurab Dzhanashvili has moved to suppress the Title III Orders on the theory that the Government's application did not sufficiently demonstrate that other investigative techniques were inadequate. (ECF No. 387, Mem. of Law in Supp. of Def. Zurab Dzhanashvili's Pretrial Mots. (“Dzhanashvili Mem.”) at 9-20.) Alex Mitselmakher has also moved to suppress the Title III Orders, arguing that the district court lacked “territorial jurisdiction to authorize the wiretaps.” (ECF No. 390, Mem. of Law of Alex Mitselmakher in Supp. of His Mot. to Suppress Intercepted Conversations (“Mitselmakher Mem.”) at 2.) Ivan Afanasyev has moved to suppress location information gathered about his cellphone, for a bill of particulars, for early disclosure of witness identities and Rule 404(b) evidence, and for an order requiring the Government to abide by its Brady obligations. (ECF No. 392, Mem. of Law in Supp. of Def. Ivan Afanasyev's Pretrial Mots. (“Afanasyez Mem.”) at 2.) Vache Hovhannisyan has moved to dismiss Count Four as duplicitous and for a bill of particulars. (ECF No. 402, Mot. to Dismiss Count Four, For Bill of Particulars, and for Leave to Join Co-Defendant's Motions (“Hovhannisyan Mem.”) at 3-6.)

         In addition, seventeen defendants (including those mentioned above) purport to join in all motions. (See ECF Nos. 385 (Zurab Dzhanashvili), 389 (Alex Mitselmakher), 391 (Ivan Afanasyev), 394 (Nazo Gaprindashvili), 395 (Denis Savgir), 396 (Mikheil Toradze), 397 (Diego Gabisonia), 398 (Azer Arslanouk), 399 (Giorgi Lomishvili), 400 (Erekle Kereselidze), 401 (Zurab Buziashvili), 402 (Vache Hovhannisyan), 403 (Akaki Ubilava), 404 (Andriy Petrushyn), 405 (Levan Makashvili), 406 (Artur Vinokurov), and 420 (Bakai Marat-Uulu).)

         For the reasons set forth below, the Court DENIES each of the pending motions.

         I. BACKGROUND

         A. Factual Background

         The following statement of facts is drawn from the parties' submissions.

         In the summer of 2014, agents with the Federal Bureau of Investigation (“FBI”) began investigating a criminal group based in New York City. (ECF No. 388-1, Aff. in Supp. of Application for Order Authorizing the Interception of Wire Commc'ns Over a Cellular Tel. (“December Aff.”) at 16.) The FBI believed that the group was controlled by a “vor v zakone, ” or a “Thief-in-Law, ” who stands at the highest level of Russian organized criminal groups, akin to a “Godfather” within an Italian organized criminal group. (Id. at 16-17.) According to the FBI, Razhden Shulaya acts as such a vor for what has been termed the “Shulaya Enterprise, ” and thus oversaw subordinates who participated in criminal activities with his permission and for his benefit in exchange for protection, and who enforced his authority through intimidation and violence. (Id. at 17-18.)

         The FBI deployed a range of techniques in investigating the Shulaya Enterprise. For example, they made controlled sales of purportedly stolen cigarettes, conducted stakeouts, and used an undercover officer. (See, e.g., id. at 18-25.) They also used confidential sources and obtained recordings of Shulaya and others through body recording devices and over consensually recorded telephone lines. (See, e.g., id. at 18-19, 25-29, 35.) In addition, they collected pen register, telephone toll data, and bank records and spoke to victims in the community. (See, e.g., id. at 29-30, 34, 43-47.)

         By fall 2016, the FBI had evidence that the Shulaya Enterprise had, among other things, operated an underground poker room, extorted debtors, and purchased and sold untaxed cigarettes. The FBI had also uncovered evidence that the Shulaya Enterprise was planning to defraud casinos in Atlantic City. Despite the investigative success to that point, the full scope of the Shulaya Enterprise's activities, its financing, and its complete membership remained unknown. (See Id. at 7 (discussing objectives of the interception).)

         In December 2016, following almost eighteen months of other investigative work, the FBI began intercepting wire and electronic communications of various members of the Shulaya Enterprise. At various points, the FBI intercepted calls to and from telephones used by Razhden Shulaya, Zurab Dzhanashvili, and Nazo Gaprindashvili. The communications were monitored from wirerooms in Manhattan, New York. (See id. at 12; ECF No. 388-2, Aff. in Supp. of Application for Order Authorizing the Interception of Wire Commc'ns Over a Cellular Tel. (“January Aff.”) at 13; ECF No. 388-3, Aff. in Supp. of Application for Order Authorizing the Interception of Wire Commc'ns Over a Cellular Tel. (“February Aff.”) at 14; ECF No. 388-4, Aff. in Supp. of Application for Order Authorizing the Interception of Wire Commc'ns Over a Cellular Tel. (“March Aff.”) at 15; ECF No. 388-5, Aff. in Supp. of Application for Order Authorizing the Interception of Wire Commc'ns Over a Cellular Tel. (“April Aff.”) at 15; ECF No. 422-7, Aff. in Supp. of Application for Order Authorizing the Interception of Wire Commc'ns Over a Cellular Tel. (“May Aff.”) at 15.)

         The FBI acted pursuant to authority conferred by six consecutive judicial orders of interception:

1. An initial order of interception was signed on December 12, 2016, by the Hon. Katherine Polk Failla. The December 12 Order permitted the interception of wire communications occurring over the cellular phones initially identified as 929-247-6909 (the “Shulaya 6909 Phone”), 201-887-7880 (the “Shulaya 7880 Phone”), 347-571-1345 (the “Zura Phone”), and 941-224-8643 (the “Anna Phone”). (Thomas Decl. ¶ 4.)
2. A second order of interception was signed on January 12, 2017, by the Hon. Lewis A. Kaplan. The January 12 Order authorized continued interception of wire communications over the Shulaya 6909 Phone, the Shulaya 7880 Phone, and the Zura Phone. The January 12 Order further authorized the initial interception of electronic communications over the Shulaya 7880 Phone and the Zura phone, as well as the initial interception of wire communications (but not electronic communications) over the cellular telephone initially identified as 929-355-2477 (the “Shulaya 2477 Phone”). (Id. ¶ 5.)
3. A third order of interception was signed on February 10, 2017, by the Hon. Paul A. Engelmayer. The February 10 Order authorized the continued wire and electronic interception over the Zura phone; continued wire interceptions over the Shulaya 6909 Phone and the Shulaya 7880 Phone; and authorized initial electronic interceptions and continued wire interceptions over the Shulaya 2477 Phone. (Id. ¶ 6.)
4. A fourth order of interception was signed on March 10, 2017, by the Hon. Denise Cote. The March 10 Order authorized the continued wire and electronic interception over the Zura Phone and the Shulaya 2477 Phone and continued wire interceptions over the Shulaya 6909 Phone and the Shulaya 7880 Phone. (Id. ¶ 7.)
5. A fifth order of interception was signed on April 7, 2017 by the Hon. George B. Daniels. The April 7 Order authorized the continued wire and electronic interception over the Zura Phone and the Shulaya 2477 Phone and continued wire interceptions over the Shulaya 6909 Phone and the Shulaya 7880 Phone. (Id. ¶ 8.)
6. A sixth order of interception was signed on May 17, 2017 by the Hon. Loretta A. Preska. The May 17, 2017 Order authorized continued interception of wire communications over the Shulaya 6909 Phone and the Shulaya 7880 Phone, and the interception of both wire and electronic communications over the Shulaya 2477 Phone and the Zura Phone. (Id. ¶ 9.)

         Each of the Title III Affidavits described various investigative techniques deployed by the FBI up to that point, the limitations of those techniques, and the need for interception to satisfy outstanding investigative goals. (See December Aff. 47-54; January Aff. 70-79; February Aff. 42-53; March Aff. 51-63; April Aff. 61-75; and May Aff. 59-73.) In each of the Title III Orders, the authorizing judge found that the Government had demonstrated adequately that normal investigative techniques had been tried and failed, were reasonably thought to be unlikely to succeed, or were too dangerous to attempt. (See ECF No. 422-1, December 12 Order of Interception at 6; ECF No. 422-2, January 12 Order of Interception at 7; ECF No. 422-3, February 10 Order of Interception at 8; ECF No. 422-4, March 10 Order of Interception at 8; ECF No. 422-5, April 7 of Interception Order at 8; ECF No. 422-6, May 17 Order of Interception at 8.) Interception pursuant to the Title III Orders revealed that the Shulaya Enterprise was pursuing a range of criminal activities, that its leaders were in contact with criminal authorities in other cities and in other countries, and that the Enterprise was committing fraud in cities around the United States. (Compare December Aff. 5-7 with May Aff. 7-10, 43-44.)

         On or about May 31, 2017, the Government sought a warrant and order for prospective location information for approximately seventeen different cellphones believed to be used by approximately seventeen different target subjects. (See generally ECF No. 391-4, Agent Aff. in Supp. of Warrant and Order for Cellphone Location and Pen Register Info., No. 17 Mag. 4107 (“GPS Aff.”).) The Hon. Katharine H. Parker, U.S. Magistrate Judge, issued the requested warrants, including a warrant for a cellphone believed to be used by Afanasyev. (See ECF No. 391-1, Warrant and Order for Cellphone Location Info. and Pen Register Info. And for Sealing and Non-disclosue (“GPS Warrant”).) This warrant allowed the FBI to access Afanasyev's precise location for 45 days-though only five days were in fact monitored-and to access stored cell site records for the five days preceding May 31, 2017. (Id.; see Thomas Decl. ¶ 12.)

         The GPS Affidavit included specific allegations about the Shulaya Enterprise's identity fraud and cargo theft schemes. (GPS Aff. ¶¶ 11-19.) For example, it identified Afanasyev's and Hovhannisyan's cellphones as having been used in the counterfeit credit card and forged check schemes as well as Afanasyev's involvement in a scheme to deliver and sell stolen goods. (Id. at 23 n.14; id. ¶¶ 15, 19(c).) The FBI began collecting location information pursuant to the GPS Warrant on or about June 2, 2017. (See ECF No. 422, Thomas Decl. ¶ 13.)

         On or about June 6, 2017, a grand jury returned an indictment charging twenty-six members and associates of the Shulaya Enterprise. (See ECF No. 1, Sealed Indictment). In subsequently unsealed superseding indictments, the grand jury charged additional persons. (See ECF. Nos. 58 (Khurtsidze), 189 (Marat-Uulu and Jikia).)

         The grand jury charged Zurab Dzhanashvili in four counts: racketeering conspiracy, conspiracy to transport and sell stolen goods, conspiracy to distribute untaxed cigarettes, and identity fraud conspiracy. (See ECF No. 1 ¶¶ 6, 9 (racketeering), 12-14 (stolen goods), 16-17 (cigarettes), 19-24 (identity fraud).) Ivan Afanasyev and Vache Hovhannisyan were also charged in the racketeering conspiracy and the identity fraud conspiracy. (See ECF No. 1 ¶¶ 9, 19-24.) Mitselmakher was charged only in the identity fraud conspiracy. (See ECF No. 1 ¶¶ 19-24.) The identity fraud conspiracy-Count Four of the Indictment-alleges that Dzhanashvili, Afanasyev, Hovhannisyan, and Mitselmakher violated 18 U.S.C. § 1028(f). (See ECF No. 1 ΒΆΒΆ 19-24.) That conspiracy had multiple objectives related to the ...


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