U.S. v. Chuang

• Decision Date: 28 February 1990
• Docket Number: No. 692,Nos. 89-1309,D,89-1406,692,s. 89-1309
• Citation: 897 F.2d 646
• Parties: UNITED STATES of America, Appellee, v. Kuang Hsung J. CHUANG, a/k/a "Joseph Chuang", Appellant. ocket
• Court: U.S. Court of Appeals — Second Circuit

Page 646

897 F.2d 646

UNITED STATES of America, Appellee, v. Kuang Hsung J. CHUANG, a/k/a "Joseph Chuang", Appellant.

No. 692, Docket Nos. 89-1309, 89-1406.

United States Court of Appeals, Second Circuit.

Argued Feb. 7, 1990.

Decided Feb. 28, 1990.

Herve Gouraige, Asst. U.S. Atty., New York City (Otto G. Obermaier, U.S. Atty., Martin Klotz, and Kerri M. Bartlett, Asst. U.S. Attys., on the brief) for appellee U.S.

Robert S. Litt, Washington, D.C. (Bruce S. Oliver, Elena Kagan, and Williams & Connolly, Washington, D.C., on the brief) for appellant Kuang Hsung J. Chuang.

Before TIMBERS, NEWMAN and ALTIMARI, Circuit Judges.

TIMBERS, Circuit Judge:

Appellant Kuang Hsung J. Chuang appeals from a judgment of conviction entered August 1, 1989, in the Southern District of New York, Miriam Goldman Cedarbaum, District Judge, 696 F.Supp. 910, upon a jury verdict on twenty-two counts, including misapplication of bank funds, making false statements to bank regulatory officials, other substantive counts, and conspiracy. The district court denied Chuang's pretrial motions to suppress evidence obtained from warrantless searches of his bank and law offices.

On appeal, we find that the chief claim of error raised by Chuang is that the district court erred in denying his suppression motions. Other claims of error have been raised and considered.

For the reasons which follow, we affirm the judgment of conviction.

I.

We shall summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.

Chuang was the chairman, president and chief executive officer of the Golden Pacific National Bank ("GPNB"). On June 17, 1985, after receiving information from an informant about certain activities at GPNB, the Office of the Comptroller of the Currency ("OCC") began a warrantless examination, pursuant to 12 U.S.C. Sec. 481 (1988), of bank records pertaining to the sale of a bank product known as "non-negotiable certificates." GPNB received no prior notice of this examination.

At about 1 P.M. on June 17, three bank examiners from the OCC entered GPNB in Manhattan and went to Chuang's office on the third floor of the six-story bank building. They produced an administrative subpoena and requested Chuang to provide documents related to the non-negotiable certificate program. In response to their request, Chuang instructed Theresa Shieh, a vice-president and cashier at GPNB, to produce the requested documents. It is undisputed that virtually all the documents reviewed by OCC examiners came from Shieh's office located on the fourth floor of the bank building; that no documents came from Chuang's office; that these documents were bank documents, not personal documents belonging to Shieh or Chuang; and that virtually all of the documents were given to the OCC upon request.

As a result of this examination, which lasted until June 21, the OCC examiners concluded that the sale of the non-negotiable certificates was fraudulent, and that Chuang had misrepresented to regulatory officials facts concerning the certificates and the use of bank funds derived from the sale of those certificates. They discovered that several hundred non-negotiable certificate customers had approximately $17 million in claims against GPNB. Not satisfied with the evidence concerning the assets underlying those liabilities, the OCC declined Chuang's request to liquidate the assets. The OCC determined that GPNB was insolvent and, on June 21, 1985, appointed the Federal Deposit Insurance Corporation ("FDIC") as its receiver.

The FDIC secured the bank building on the evening of Friday, June 21. The next day, it began the extensive process of examining bank documents and calculating assets and liabilities. A law firm, Chuang & Associates, owned by Chuang, was located on the third floor of the bank building. As part of its examination of GPNB, the FDIC searched the third floor offices of Chuang and his secretary where they performed both bank and law firm work.

On May 19, 1987, Chuang was indicted, together with Shieh, in a 48-count indictment. Prior to trial, defendants moved to dismiss the indictment on various grounds, including duplicity and failure to state an offense. They also moved to suppress the evidence obtained by the OCC during its warrantless examination of GPNB and evidence obtained by the FDIC during its warrantless examination of the offices of Chuang and his secretary. The district court denied these motions.

Prior to trial, two superseding indictments were returned and several counts were severed. At the close of the government's case, several counts were dismissed by the district court. The case was submitted to the jury on twenty-two counts. Count One charged Chuang and Shieh with conspiring to defraud the United States, to misapply bank funds, and to make false statements to bank regulatory officials and agencies, in violation of 18 U.S.C. Sec. 371 (1988). Counts Two through Eleven charged both defendants with making false statements and concealing bank deposits from bank regulatory agencies, in violation of 18 U.S.C. Sec. 1001 (1988). Counts Twelve through Fourteen charged both defendants with making false statements to bank regulatory officials and agencies, in violation of 18 U.S.C. Sec. 1001. Counts Fifteen through Twenty charged both defendants with misapplication of bank funds, in violation of 18 U.S.C. Sec. 656 (1988). Count Twenty-One charged Chuang with conspiracy to cover up illegal campaign contributions made with bank funds, in violation of 18 U.S.C. Sec. 371. Count Twenty-Two charged both defendants with wire fraud, in violation of 18 U.S.C. Sec. 1343 (1988).

The essence of the government's case was that defendants defrauded bank customers by selling ordinary certificates of deposit called "non-negotiable certificates"; that they diverted the funds received to personal businesses without informing the customers or GPNB's board of directors and without insuring the funds with the FDIC; and that they misrepresented the facts regarding the non-negotiable certificate program to bank regulatory officials.

The jury trial began on September 26, 1988 and concluded on January 18, 1989, when the jury returned guilty verdicts against both defendants on all 22 counts. On June 1, 1989, the district court sentenced Chuang to concurrent five year terms of imprisonment on all counts. On August 1, 1989, the court ordered Chuang to comply fully with all the terms of a settlement agreement with the FDIC and to make restitution of $200,000.

This appeal by Chuang followed.

II.

Chuang's chief claim of error centers upon two discreet searches made respectively by the OCC and the FDIC.

We turn first to the propriety of the district court's order denying the motion to suppress documents obtained by the OCC's warrantless search.

In his motion to suppress bank documents obtained by the OCC during its June 1985 examination of GPNB pursuant to 12 U.S.C. Sec. 481 (1988), Chuang asserted that the examination violated the Fourth Amendment. Specifically, he claimed that Sec. 481, which authorizes warrantless examinations of national banks, is unconstitutional on the ground that it does not provide "a constitutionally adequate substitute for a warrant", as required by the Supreme Court in New York v. Burger, 482 U.S. 691, 703, 107 S.Ct. 2636, 2644, 96 L.Ed.2d 601 (1987). Observing that none of the documents inspected by the OCC was obtained from Chuang's office, the district court ruled that Chuang lacked standing to challenge the OCC's examination of GPNB. Chuang asserts that the district court erred in this determination. He renews on appeal his claim that Sec. 481 is unconstitutional. We need not address the merits of this constitutional challenge since we agree with the district court that Chuang has not established a legitimate expectation of privacy in the bank documents examined by the OCC.

In reviewing the district court's determination that Chuang lacked standing, we are mindful that the Supreme Court has dispensed with the notion of standing as being theoretically distinct from the substantive merits of a Fourth Amendment claim. Rakas v. Illinois, 439 U.S. 128, 133, 140, 99 S.Ct. 421, 428, 58 L.Ed.2d 387 (1978). In Rakas, the Court concluded that "the better analysis forthrightly focuses on the extent of a particular defendant's rights under the Fourth Amendment, rather than on any theoretically separate, but invariably intertwined concept of standing." Id. at 139, 99 S.Ct. at 428. Put another way, the proper inquiry turns on whether "the disputed search and seizure has infringed an interest of the defendant which the Fourth Amendment was designed to protect." Id. at 140, 99 S.Ct. at 429.

With Rakas in mind, we focus on whether defendant has established a legitimate expectation of privacy in the area searched. United States v. Rahme, 813 F.2d 31, 34 (2 Cir.1987); United States v. Smith, 621 F.2d 483, 486 (2 Cir.1980), cert. denied, 449 U.S. 1086, 101 S.Ct. 875, 66 L.Ed.2d 812 (1981); United States v. Brien, 617 F.2d 299, 305 (1 Cir.), cert. denied, 446 U.S. 919, 100 S.Ct. 1854, 64 L.Ed.2d 273 (1980). This threshold question involves two separate inquiries: first, Chuang must demonstrate a subjective expectation of privacy in a searched place or item; and second, his expectation must be one that society accepts as reasonable. United States v. Paulino, 850 F.2d 93, 97 (2 Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1967, 104 L.Ed.2d 435 (1989).

It is well-settled that a corporate officer or employee in certain circumstances may assert a reasonable expectation of privacy in his corporate office, and may have standing with respect to searches of corporate premises and records. See, e.g., United States v. Leary, 846 F.2d 592, 595-96 (10 Cir.1988); United States v. Brien, supra, 617 F.2d at 305-06; United States v. Lefkowitz, 464 F.Supp. 227, 230-31 (C.D.Cal.1979), aff'd, 618 F.2d 1313 (9 Cir.)...