728 F.3d 885 (9th Cir. 2013), 11-30342, United States v. Sedaghaty

Docket Nº:11-30342
Citation:728 F.3d 885
Opinion Judge:McKEOWN, Circuit Judge:
Party Name:UNITED STATES OF AMERICA, Plaintiff-Appellee, v. PIROUZ SEDAGHATY, Defendant-Appellant
Attorney:Steven T. Wax (argued), Federal Public Defender, Portland, Oregon; Lawrence Matasar, Lawrence Matasar, P.C., Portland, Oregon, for Defendant-Appellant. Kelly A. Zusman (argued), Christopher Cardani, and Charles Franklin Gorder, Jr., Assistant United States Attorneys, Office of the United States A...
Judge Panel:Before: Mary M. Schroeder, M. Margaret McKeown, and Richard C. Tallman, Circuit Judges. Opinion by Judge McKeown; Partial Concurrence and Partial Dissent by Judge Tallman. TALLMAN (In Part) TALLMAN (In Part) TALLMAN, Circuit Judge, concurring in part and dissenting in part:
Case Date:August 23, 2013
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 885

728 F.3d 885 (9th Cir. 2013)

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

PIROUZ SEDAGHATY, Defendant-Appellant

No. 11-30342

United States Court of Appeals, Ninth Circuit

August 23, 2013

Argued and Submitted, Seattle, Washington: December 3, 2012.

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Appeal from the United States District Court for the District of Oregon. D.C. No. 6:05-cr-60008-HO-2. Michael R. Hogan, District Judge, Presiding.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED FOR A NEW TRIAL.

Steven T. Wax (argued), Federal Public Defender, Portland, Oregon; Lawrence Matasar, Lawrence Matasar, P.C., Portland, Oregon, for Defendant-Appellant.

Kelly A. Zusman (argued), Christopher Cardani, and Charles Franklin Gorder, Jr., Assistant United States Attorneys, Office of the United States Attorney for the District of Oregon; Virginia Marie Vander Jagt, Counsel, United States Department of Justice, Washington, D.C., for Plaintiff-Appellee.

Before: Mary M. Schroeder, M. Margaret McKeown, and Richard C. Tallman, Circuit Judges. Opinion by Judge McKeown; Partial Concurrence and Partial Dissent by Judge Tallman.

SUMMARY[*]

Criminal Law

The panel affirmed in part and reversed in part a criminal judgment and remanded for a new trial in a tax fraud case -- that involved significant amounts of classified materials and in camera, ex parte reviews as well as classified proceedings -- stemming from charges that the defendant falsified a 2000 charitable organization tax return in order to conceal his support of an independence movement in Chechnya.

The panel was not persuaded by the defendant's arguments regarding the classified material, the district court's evidentiary decisions, the notion that the government was one-sided in its effort to obtain evidence abroad, or his view that the government's characterization of the evidence rose to the level of a constitutional violation.

The panel held that the government violated its obligations pursuant to Brady v. Maryland by withholding significant impeachment evidence relevant to a central government witness.

After reviewing the classified record, the panel determined that the district court erred in approving an inadequate substitution for classified material that was relevant and helpful to the defense. The panel held that the substitution did not satisfy the requirement in the Classified Information Procedures Act, 18 U.S.C. app. 3 § 6(c)(1), that the summary " provide the defendant with substantially the same ability to make his defense as would disclosure of the specified classified information."

The panel also concluded that the search that the government conducted of the defendant's computer hard drives went well beyond the explicit limitations of the warrant, and remanded to the district court to consider the appropriate scope of items seized and whether the exclusionary rule should apply.

Considering the errors both individually as well as cumulatively in light of the evidence as a whole, the panel concluded that the errors were prejudicial.

The panel filed concurrently, under appropriate seal, a classified opinion with respect to the substitution. That opinion also addresses in more detail the defendant's claim regarding foreign bank records.

Concurring in part and dissenting in part, Judge Tallman wrote that the opinion's recitation of the facts is inappropriately written from the perspective of the defense theory of the case, that the majority unduly constricts the text of the search warrant and disregards the underlying reason for the very existence of the exclusionary rule, that the opinion disregards the district judge's express factual findings and his rulings on the potential impact of challenged witness testimony following an evidentiary hearing, and that the opinion discounts the extraordinary efforts by the Department of Justice to abide by its criminal discovery obligations and the district court's extensive oversight of those efforts in dealing with extremely sensitive national security concerns.

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OPINION

McKEOWN, Circuit Judge:

This is a tax fraud case that was transformed into a trial on terrorism. The case stems from charges that Pirouz Sedaghaty (known as Pete Seda) falsified a 2000 charitable organization tax return in order to conceal his support of an independence movement in Chechnya, a republic in the Caucasus mountains of southern Russia. Seda founded the U.S. branch of the Al-Haramain Islamic Foundation, Inc. (" Al-Haramain" ), a Saudi Arabian charity that the U.S. government suspected of funding terrorist activities and supporting the Chechen mujahideen (holy warriors engaged in violent jihad against Russian forces) under the guise of humanitarian aid.1 Seda's defense was based on his claim that any discrepancy on the tax return could be traced to his accountant, as well as on his long history of peaceful engagement on behalf of Islam and his track record of charitable work in the United States and abroad.

The appeal illustrates the fine line between the government's use of relevant evidence to document motive for a cover up and its use of inflammatory, unrelated evidence about Osama Bin-Laden and terrorist activity that prejudices the jury. This tension was evident both before and during trial and dominates much of the briefing on appeal.

Similarly, what was charged as a tax fraud case in fact involved significant amounts of classified materials and multiple in camera, ex parte reviews as well as classified proceedings. These classified proceedings figure prominently in the appeal. To the extent possible, we have written our opinion without reference to classified materials so as to allow the maximum transparency in this criminal case. To supplement this opinion, we are filing concurrently, under appropriate seal, a classified opinion with respect to the substitution--a terse summary that the government provided Seda in place of actual classified documents that are relevant and helpful to his defense. That opinion also addresses in more detail Seda's claim regarding foreign bank records.

We recognize that a system that permits ex parte hearings and requires the court to pass on the legitimacy of claims related to classified information places a heavy burden on the court. We also recognize that defense counsel, who best know their client's interests, are placed at a serious disadvantage in challenging classified proceedings in a vacuum. Toward that end, we take our duty very seriously and undertake our review of classified information with special scrutiny.2

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Following his conviction for tax violations, Seda challenges a host of rulings. In particular, he takes aim at the prosecution's failure to disclose its interview notes regarding payments to a key witness, the court's handling of classified information under the provisions of the Classified Information Procedures Act (" CIPA" ), 18 U.S.C. app. 3, the breadth of computer and other documents seized pursuant to a warrant, and various evidentiary rulings. Seda also claims that he was deprived of a fair trial by the government's refusal to aid him in obtaining evidence from overseas, by its appeal to religious preferences, and by its use of inflammatory evidence of guilt by association.

In the main, we are not persuaded by Seda's arguments regarding the classified material, the district court's evidentiary decisions, the notion that the government was one-sided in its effort to obtain evidence abroad, or his view that the government's characterization of the evidence rose to the level of a constitutional violation. Nonetheless, there were significant errors that merit a new trial.

We conclude that the government violated its obligations pursuant to Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), by withholding significant impeachment evidence relevant to a central government witness. After reviewing the classified record, we also determine that the court erred in approving an inadequate substitution for classified material that was relevant and helpful to the defense. The substitution did not satisfy CIPA's requirement that the summary " provide the defendant with substantially the same ability to make his defense as would disclosure of the specific classified information." 18 U.S.C. app. 3 § 6(c)(1). We reject Seda's remaining challenges to the handling of classified information under CIPA. We also conclude that the search that the government conducted of Seda's computer hard drives went well beyond the explicit limitations of the warrant and remand to the district court to consider the appropriate scope of items seized and whether the exclusionary rule should apply.

We are particularly troubled by the cumulative effect of these errors, which resulted in admitting evidence illegally seized while denying Seda both material impeachment evidence and potentially exculpatory evidence. See United States v. Wallace, 848 F.2d 1464, 1476 (9th Cir. 1988) (emphasizing the cumulative effect of three trial errors improperly admitting impeachment evidence of a defense witness, erroneously bolstering the testimony of a prosecution witness, and admitting defendant's statements that should have been suppressed). Although each of these issues potentially merits a remand or a new trial on its own, given these multiple, significant errors, " 'a balkanized, issue-by-issue harmless error review' is far less effective than analyzing the overall effect of all the errors in the context of the evidence introduced at trial. . . ." United States v....

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