United States v. Nejad

436 F.Supp.3d 707

UNITED STATES of America,

v.Ali Sadr Hashemi NEJAD, Defendant.

18-cr-224 (AJN)

United States District Court, S.D. New York.

Signed January 28, 2020

Andrew James DeFilippis, Jane Kim, Michael Kim Krouse, Rebekah Allen Donaleski, Stephanie Lindsay Lake, David William Denton, Jr., United States Attorney's Office, Matthew Joseph Laroche, Assistant U.S. Attorney, New York, NY, for United States of America.

Brian Matthew Heberlig, Bruce C. Bishop, David Matthew Fragale, Nicholas Paul Silverman, Steptoe & Johnson, LLP, Washington, DC, Michelle Lynn Levin, Reid Weingarten, Steptoe & Johnson, LLP, New York, NY, for Defendants

OPINION & ORDER

ALISON J. NATHAN, District Judge:

Defendant Ali Sadr Hashemi Nejad is charged in a six-count Indictment. Dkt. No. 2. Before the Court are Sadr's motion for a Franks hearing and for suppression of search warrant evidence, motion for return of property, and motion to exclude. For the reasons that follow, the Court GRANTS in part, DENIES in part, and RESERVES JUDGMENT in part on Sadr's motion to suppress search warrant evidence, DENIES his corollary requests for a Franks hearing, RESERVES JUDGMENT on his motion for return of property, and DENIES as moot his motion to exclude.

I. BACKGROUND

A. Factual Background

The Court assumes familiarity with the factual background in this matter as set forth in its December 6, 2019 Opinion and Order deciding Sadr's first seven pretrial motions. See Dkt. No. 164. In brief, the Indictment alleges that an Iranian-incorporated entity controlled by Sadr and his family was involved in a housing construction project in Venezuela. Ind. ¶ 8. The charges in the Indictment stem from payments for the construction of low-income housing in Venezuela that were allegedly routed from a Venezuelan state-owned energy company through banks in the United States to the Swiss accounts of entities owned by Sadr and his family. See id. ¶¶ 11–13. The Government alleges that this transaction structure violated the International Emergency Economic Powers Act ("IEEPA") and the Iranian Transactions and Sanctions Regulations ("ITSR").¹

B. Procedural Background

This case originated as an investigation by the New York County District Attorney's Office. On April 16, 2014, June 16, 2014, and October 21, 2015, the DA's Office obtained search warrants from the Honorable Michael Obus, a justice of the New York County Supreme Court, to search certain of Sadr's email accounts for evidence of involvement in money laundering, offering a false instrument for filing, or falsifying business records. See Dkt. 108 at 56–59; see also Dkt. 96-1–4. These search warrants generally provide that "there is reasonable and probable cause to believe that certain property, evidence, and records" exists including

any and all subscriber and account information and history, and retained account data, for [the target] email accounts, any associated or linked accounts, including: payment history, detailed billing information, method of payment, including full debit, credit, or bank account numbers used, Contacts or "Buddy List" content, sent and received email messages that are or were in the account, saved or draft email messages, any files attached to any email messages, Internet Protocol ("IP") log history, connection log data, account creation data, passwords, sign-on codes, account numbers, and any other information maintained by or within the databases of the service provider and related entities regarding the named email account and subscriber and any linked email accounts and subscribers, which shows or tends to show the following :

...

• involvement in Money Laundering, Offering a False Instrument for Filing, Falsifying Business Records , and an attempt and conspiracy to commit said crimes, and/or involvement in the planning of, recruiting for, or commission of those crimes; communication with witnesses to and victims of the above-named crimes; communication with third parties relating to witnesses to and victims of the above-named crimes; and communication with third parties while using aliases or other identities.

See, e.g. , Dkt. No. 96-1 at 37 (emphasis added). They further authorize executing agents

to search, enter, retrieve, examine, copy, and analyze the ... servers and ... accounts associated with target email address ... from the time period of the inception of the target email account to the date of the warrant, for any and all payment history, detailed billing information, method of payment and credit card numbers used, contacts, sent and received email messages that are or were in the account, saved or draft email messages, any files attached to such email messages, basic subscriber and account information, and Internet Protocol ("IP") log history ...

Id. at 38.

In response to these search warrants and others, internet service providers provided the D.A. with data consisting of over one million documents from various email accounts—including both Sadr's and others' accounts—which were processed by it on a rolling basis. Dkt. No. 155 at 4. In order to process this data, D.A. employees began in May 2014 to search it for material to be seized pursuant to the search warrants. Id. at 5. During this responsiveness review, they seized certain documents identified as responsive to the search warrants. Id. at 6. By April 2017, the responsiveness review was complete. Id. at 3–7.

At the conclusion of the responsiveness review, the D.A. referred the case to the United States Attorney's Office for the Southern District of New York for federal prosecution and provided the U.S. Attorney's Office with a binder of 420 seized documents at that time. Id. at 8. Between the time the case was referred to the U.S. Attorney's Office and the Indictment was filed, D.A. employees continued to access the entire set of data—beyond just previously seized documents—in order to "pull complete versions of [previously] seized documents" and to query the data "for purposes of preparing materials related to the Indictment." Id. These employees were given instructions to "(1) locate specific documents that were responsive to the search warrants—which [members of the review team] ha[d] seen when conducting earlier searches, or (2) query the [entire set of data] regarding topics for which more experienced members of the investigative team had previously seen responsive documents." Id.

On March 19, 2019, the Indictment in this case was returned, and on March 28, 2018, Sadr arrived in the Southern District of New York following his arrest in Virginia. Id. at 9. From April to May 2018, the U.S. Attorney's Office produced to Sadr, among other things, all of the data from his own email accounts as well as the 420 seized documents the D.A. provided the U.S. Attorney's Office with when it made the referral. Id. During the process of producing these documents, D.A. employees again accessed the entire set of data in some instances to, in its words, pull "complete versions" of the 420 documents. Id.

In May 2018, the U.S. Attorney's Office requested that the D.A. provide it with information related to Sadr's travel to or from Iran for the purposes of opposing his bail application. Id. In response, the D.A. again accessed the entire set of data and seized some documents that had not previously been seized. Id. at 9–10.

In May 2019, the U.S. Attorney's Office learned that the D.A. had seized documents beyond the 420 that were produced to Sadr in May 2018, and that some of these seized materials had not previously been produced to Sadr. Id. at 10–11. Ultimately, 622 documents—all from non-Sadr email accounts—were identified that had not previously been provided to Sadr. Id. at 11. On September 17, 2019, the Government produced these 622 non-Sadr documents, as well as 1,775 documents seized from Sadr's accounts that had previously been produced to him in April 2018 but were not then identified to him as having been seized. Id. at 2, 11.

On February 25, 2019, Sadr filed nine pretrial motions, including the motion for a Franks hearing and for suppression of search warrant evidence and the motion for return of property now before the Court. See Dkt. Nos. 95, 97. At a conference before the Court on September 9, 2019, the Government revealed to Sadr for the first time the information it had learned back in May: that "there were custodians searched and documents seized that were not Mr. Sadr's accounts, that were not produced in [the] initial Rule 16 discovery"—namely, the 622 documents identified above. Dkt. No. 137 at 35:5–7. Following that revelation, Sadr informed the Court of his intention to supplement his existing motions to suppress and for return of property and to file an additional motion to exclude the 622 late-disclosed documents from the non-Sadr accounts. Dkt. No. 143 at 2.

In its supplemental opposition to the motions now before the Court, the Government represents that it will use neither the 622 non-Sadr documents nor the 1,775 Sadr documents identified above in its case-in-chief. Dkt. No. 155 at 11. The Government further clarified, at oral argument on these motions on November 25, 2019, that it will not rely on these documents at any point in trial—whether in its case-in-chief, on cross-examination, or in its rebuttal case—and will thus limit itself to only the 420 documents produced to Sadr in May 2018. See Dkt. No. 173 at 38:24–39:4.

At that argument, the Court inquired whether the 420 documents the Government now represents it will exclusively rely on at trial were in fact all identified as responsive by the conclusion of the responsiveness review in April 2017. The Government represented that the "vast majority" were and agreed to conduct a "page-by-page" analysis to determine whether each page of the 420 documents was identified as responsive by that time. See id. at 42:11–44:22.

The Government ultimately conducted a page-by-page analysis of 417 documents, having "removed from the universe" of 420 documents three...