United States v. Manafort

314 F.Supp.3d 258

UNITED STATES of America,

v.Paul J. MANAFORT, Jr., Defendant.

Crim. Action No. 17-0201-01 (ABJ)

United States District Court, District of Columbia.

Signed July 18, 2018

Adam C. Jed, U.S. Andrew Weissmann, Elizabeth Barchas Prelogar, Greg Donald Andres, Kyle Renee Freeny, Michael Richard Dreeben, Scott A.C. Meisler, Department of Justice Special Counsel's Office, Washington, DC, for United States of America.

Kevin M. Downing, Law Office of Kevin M. Downing, Richard William Westling, Epstein Becker & Green, P.C., Thomas Edward Zehnle, Law Office of Thomas E. Zehnle, Thomas C. Green, Sidley Austin LLP, David Walker Bos, Federal Public Defender for the District of Columbia, Shanlon Wu, WU, Grohovsky & Whipple, PLLC, Washington, DC, Annemarie McAvoy, Pro Hac Vice, McAvoy Consulting, LLC, Jamaica, NY, Walter Mack, Pro Hac Vice, Doar Rieck Devita Kaley & Mack, New York, NY, for Defendant.

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MEMORANDUM OPINION AND ORDER

AMY BERMAN JACKSON, United States District Judge

Defendant Paul J. Manafort, Jr. has moved to suppress the evidence seized pursuant to a search warrant executed at his Alexandria, Virginia residence on July 26, 2017. Def.'s Mot. to Suppress [Dkt. # 264] ("Def.'s Mot.") at 1–2. He argues that the warrant was unconstitutionally overbroad. Id. at 1–4. He also complains that the affidavit submitted in support of the warrant application did not set forth probable cause to support the seizure of electronic devices; that the agents who executed the search exceeded its permissible scope; and that the government has improperly retained some of the items it seized. Id. at 1–2, 4–10.¹ The government opposed the motion, Gov't Mem. in Opp. to Def.'s Mot. (Public) [Dkt. # 284], (Sealed) [Dkt. # 286] ("Gov't Opp."), the motion is fully briefed, see Def.'s Reply to the Gov't Opp. [Dkt. # 289] ("Def.'s Reply"), and the Court heard argument on May 23, 2018. As explained in more detail below, the Court will deny the motion. Given the nature of the investigation, the warrant was not too broad in scope, and the affidavit set forth sufficient grounds to believe that there would be relevant material on the premises stored on electronic media. And, even if the Court could find fault with the warrant application if it were reviewing it in the first instance, the agents relied in good faith on a warrant signed by a United States Magistrate Judge. For all of these reasons, the evidence obtained during the execution of the warrant will not be suppressed.

FACTUAL BACKGROUND

On July 25, 2017, federal agents applied for a warrant in the United States District Court for the Eastern District of Virginia, seeking authorization to search Manafort's condominium in Alexandria.² Search Warrant, Notice Att. at 1–16 ("Warrant"). The application sought authorization to search for and seize materials relating to alleged violations of ten criminal statutes, Application for a Search Warrant, Notice Att. at 17–66 ("Appl."), and it was supported by an affidavit prepared by an FBI agent, who stated there was "probable cause to believe that the [Alexandria residence] contain[ed] evidence, fruits, and instrumentalities" of those offenses. Aff. in Supp. of Appl., Notice Att. at 22–62 ("Aff.") ¶ 3.

The agent averred that between 2006 and 2014, Manafort and his associate, Richard W. Gates, III, worked as political consultants for the Ukrainian Party of Regions, and Viktor Yanukovych, who was the head of the Party and the President of Ukraine from 2010 to 2014. Aff. ¶ 9. According to the affidavit, Manafort and Gates established a number of bank accounts in Cyprus. Aff. ¶¶ 11–12. Those accounts received payments to Manafort or Manafort-related entities for their work on behalf of the Ukrainians, and they were used to pay vendors directly for goods and services purchased by Manafort. Aff. ¶¶ 11–14. The affiant also states that Manafort performed "significant work" for Rinat Akhmetov, a financial supporter of President Yanukovych, and Oleg Deripaska, a Russian oligarch. Aff. ¶ 9. He adds that a company jointly owned by Manafort and his wife received a $10 million loan from a "Russian lender," identified in documents obtained by the government as "Derapaska." Aff. ¶ 16.

The affidavit sets forth grounds to believe that Manafort, Gates, and their entities, including Davis Manafort, failed to register as agents of a foreign principal as required by the Foreign Agent Registration Act ("FARA"), 22 U.S.C. §§ 611 – 21, until June of 2017. Aff. ¶¶ 19, 9. The agent also stated that the foreign source income reported on Manafort's tax returns did not appear to include the distributions to or from the Cypriot bank accounts on his behalf, Aff. ¶¶ 20–21, nor did Manafort file the reports required by the Bank Secrecy Act, 31 U.S.C. §§ 5314 and 5322(a), to disclose his interest in those foreign accounts. Aff. ¶ 18. The affidavit also detailed alleged misrepresentations to secure bank loans and loan extensions. Aff. ¶¶ 24–46. [redacted]

The agent then listed a number of facts and circumstances underlying his belief that defendant's Alexandria residence was likely to contain evidence of these crimes. First of all, an individual who works with Manafort had told the agent that Manafort used a home office at that address to conduct his business and that he maintained records there. Aff. ¶¶ 64–66. Also, defendant had communicated with the Department of Justice about filings to be made under FARA, and at least one communication from 2016 was addressed to defendant's Alexandria residence. Aff. ¶ 68. The government was in possession of bank and financial records for defendant, [redacted] and "Davis Manafort Part." addressed to his residence in Alexandria, and it had records showing that Manafort's prior residence had been listed as the address of record for a number of accounts. Aff. ¶¶ 70–71. Also, investigators had obtained bank records and invoices sent to defendant's home in Alexandria reflecting the purchase of clothing, jewelry, rugs, and other goods using funds wired from several of the Cypriot accounts listed in the affidavit. Aff. ¶¶ 72–73. They had evidence of wire transfers from the Cypriot accounts to a rug store in Alexandria totaling more than $360,000, and a store owner reported that it was defendant who purchased the rugs. Aff. ¶ 73. This led the agent to believe that rugs purchased using funds from the Cypriot accounts would also be found at the residence. Aff. ¶ 73.

With regard to electronic files, the employee source told the agent that Manafort: used a Mac desktop computer in his home office; "frequently stored" historical and current records on "external hard drives, thumb drives, and magnetic disks;" "made widespread use of electronic media in the course of his business activity;" and had kept a "drawer full of phones and electronic equipment" at a prior residence. Aff. ¶ 76.

Based on the application and supporting affidavit, U.S. Magistrate Judge Theresa C. Buchanan approved the issuance of a search warrant on July 25, 2017. Warrant, Notice Att. at 1. The warrant authorized law enforcement agents to search defendant's Alexandria residence, including "any locked drawers, containers, cabinets, safes, computers, electronic devices, and storage media (such as hard disks or other media that can store data) found therein." Warrant. Notice Att. at 12. Among other items, it authorized agents to seize:

1. Records relating to violations of 31 U.S.C. §§ 5314, 5322(a) (failure to file a report of foreign bank and financial accounts); 22 U.S.C. § 611, et. seq. (foreign agents registration act); 26 U.S.C. § 7206(1) (filing a false tax return); 18 U.S.C. § 1014 (fraud in connection with the extension of credit); 18 U.S.C. §§ 1341, 1343, and 1349 (mail fraud, wire fraud, and conspiracy to commit these offenses); 18 U.S.C. §§ 1956 and 1957 (money laundering and money laundering conspiracy); 52 U.S.C. §§ 30121(a)(1)(A) and (a)(2) (foreign national contributions); and 18 U.S.C. §§ 371 and 2 (conspiracy, aiding and abetting, and attempt to commit such offenses) ... occurring on or after January 1, 2006, including but not limited to:

a. Any and all financial records for Paul Manafort, Jr., [redacted] Richard Gates, or companies associated with [them] ...;

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i. Evidence indicating Manafort's state of mind as it relates to the crimes under investigation; .... [and]

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2. Computers or storage media used as a means to commit the Subject Offenses.

Warrant, Notice Att. at 13–14.

On July 26, 2017, FBI agents executed the warrant and prepared an inventory of records that they either seized or imaged on site. Warrant Return, Notice Att. at 2–11 (listing financial documents including bank statements, deposit slips, transaction registers; business and personal records including documents concerning real estate and taxes; and an iMac desktop computer, a MacBook Air laptop computer, thumb drives, external hard drives, CDs, memory accessories to cameras and printers, a "G drive," DVD disks, as well as an iPod, two iPads, and an iPhone). The agents imaged many of the electronic devices, including the two computers, on site and left them there. Gov't Opp. at 6; Warrant Return, Notice Att. at 7–9.

As part of the seizure, agents identified ten sets of documents as potentially covered by the attorney client privilege. Warrant Return, Notice Att. at 10–11. This material was separated and made available to defense counsel. Gov't Opp. at 6. The government utilized attorneys who were not members of the trial team to screen electronic devices that had been seized for privileged materials and used automated processes to screen for irrelevant materials. Gov't Opp. at 6. The government described the procedure it was following for these purposes in correspondence with defense counsel. Gov't Opp. at 19–20; Letter of Nov. 17, 2017, Ex. A to Gov't Opp. [Dkt. # 284-1] ("Nov. 17 Letter") at 3, 11; Letter of Dec. 1, 2017, Ex. B to Gov't Opp. [Dkt. # 284-2] at 3.

LEGAL STANDARD

The Fourth...