Thursday, October 25, 2012

In Brief to Second Circuit, Former Federal Judges Fault Wiretap Application in Insider Trading Case for Failure to Disclose SEC Investigation

In an insider trading case, eight former federal district and circuit court judges argued in an amicus brief to the Second Circuit Court of Appeals that the federal government recklessly failed to disclose an ongoing SEC investigation in its wiretap application even though that investigation was the most important part of the criminal investigation into the insider trading at the time of the wiretap application and the SEC investigation employed entirely conventional investigative techniques. The trial court found that these omissions made it impossible for the authorizing judge to fulfill his function of determining whether conventional investigative techniques were likely to prove inadequate, contended amici, a necessary finding before a wiretap can be authorized under Title III.  Nevertheless, the district court held that the government’s omissions were not material and refused to suppress the resulting wiretap evidence, relying upon evidence that was presented by the government at  the suppression hearing, but never made available to the authorizing judge, that the SEC investigation had  failed to fully uncover the scope of Rajaratnam’s alleged insider trader ring and was reasonably unlikely to do so because evidence suggested that Rajaratnam and others conducted their scheme by telephone. (US v. Chiesi, CA-2, No. 11-4416).

According to former federal judges John W. Bissell, Robert J. Cindrich, John J. Gibbons, Nathaniel R. Jones, Timothy K. Lewis, Stephen M. Orlofsky, H. Lee Sarokin, and  Alfred M. Wolin, the district court’s decision in this regard is not only inconsistent with the case law regarding suppression, but also dangerously undermines judges’ ability to provide meaningful oversight of wiretaps and other electronic surveillance.  By allowing the government to retroactively rewrite a wiretap application, said amici, the district court transformed the prior approval process into little more than an empty gesture, creating  incentives for the government to mislead authorizing judges and undermining the ability of these judges to provide the prior approval and oversight that the Constitution and laws of the United States demand.  The former federal judges asked the Second Circuit to correct this serious error and clarify that a motion to suppress a wiretap does not offer the government an opportunity to introduce facts that it failed to include in its wiretap application.

Citing Supreme Court precedent, the amicus brief noted that by its very nature electronic eavesdropping involves an intrusion on privacy that is broad in scope. Berger v. New York, 388 U.S. 41, 56 (1967).  With this intrusion in mind, the Fourth Amendment and Title III demand close judicial oversight of wiretaps, they said, including prior judicial approval, in order to ensure that the appropriate balance between the interests of law enforcement and the privacy  interests of individuals is maintained.  But judges can only perform this crucial role if the government is forthright during the wiretap application process, particularly because the proceedings are ex parte, and judges are therefore entirely dependent upon government representations in determining whether a wiretap is appropriately authorized.

It also undermines the central role that judges play in the wiretap authorization process and, more generally, their capacity to perform their constitutional and statutory function of acting as a vital check on executive branch actions which may intrude into personal privacy.  Even more troubling, perhaps, it writes a dangerous new chapter in the history of the relationship between the executive and judicial branches, so essential to the scheme of government.  For these reasons, amici said that the district court’s decision should not be permitted to stand. The former federal judges urged the Second Circuit to clarify that, in finding that government misrepresentations or omissions in a wiretap application were not material, the district court can rely only upon those facts that were presented to the authorizing judge in the government’s wiretap application.