U.S. v. Gerace, No. 00-CR-009S(Sr) (W.D.N.Y. 1/10/2002)
| Decision Date | 10 January 2002 |
| Docket Number | No. 00-CR-009S(Sr).,00-CR-009S(Sr). |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. PETER GERACE and MICHAEL GEIGER, Defendants. |
| Court | U.S. District Court — Western District of New York |
Pursuant to 28 U.S.C. § 636(b)(1), all pretrial matters in this case were originally referred to former Magistrate Judge Carol E. Heckman by the Hon. William M. Skretny. Subsequently, by order of Chief Judge David G. Larimer, all pretrial matters in this case were referred to the undersigned. A specific order recommitting certain issues to be determined by this Court was issued by Judge William M. Skretny on October 16, 2000. The defendants are charged in a one-count indictment with conspiracy to commit wire fraud in connection with telemarketing activities, in violation of 18 U.S.C. § 1343 and 371.
Presently before me are three matters which are all interrelated. The first and second issues to be addressed were specifically referred by Judge Skretny by his Order of October 16, 2000 and involve the prior Report and Recommendation of former Magistrate Judge Carol E. Heckman, which was filed on May 22, 2000 (Dkt. #13). In her Report and Recommendation, Judge Heckman recommended that the defendants' motion seeking suppression of certain evidence be denied. After careful study of that Report and Recommendation, Judge Skretny determined that additional findings were necessary prior to rendering his decision on the defendants' motion to suppress and therefore, recommitted the matter to the undersigned for such findings. This Report relates to the detention of certain UPS packages by UPS representatives and the length of time said packages were detained in light of the government's concessions that "(1) probable cause did not exist at the time the packages were `detained' by UPS; and (2) UPS was acting as an agent of the Government at the time when (sic) it `detained' the packages at issue." See Order of Judge Skretny, dated October 16, 2000, ¶ 6 (Dkt. #36).1
Specifically, Judge Skretny ordered that this matter be recommitted to the undersigned for further findings on:
(1) whether reasonable suspicion existed at the time that UPS "detained" the packages at issue and (2) whether the length of time that the packages were "detained" before a search warrant was issued was reasonable under the law.
Order of Judge Skretny (Dkt. #36) (emphasis added). It should be noted that Judge Skretny declined to adopt then-Magistrate Judge Heckman's findings and recommendation on these issues. Id. at p. 2 () (emphasis added). Judge Skretny further ordered that I determine whether a hearing is necessary to resolve said issues. A hearing was ordered and held on December 27, 2000, and upon completion of same, oral argument by counsel was also heard. Thereafter, a briefing schedule was established for the filing of briefs on the issues by the respective parties. This schedule was amended at the request of defense counsel and government counsel.
Subsequently, defense counsel filed a motion for reconsideration of this Court's Decision and Order denying defendants' request for a Franks hearing. Argument of this motion was consolidated with the issues relating to defendants' motion to suppress, and oral argument was heard on August 17, 2001. On November 5, 2001, the Court held a hearing with counsel to address the issue of whether the defendants had standing to make the motion to suppress, an issue that is discussed in more detail below.
The final issue to be addressed in this Report is the motion of the defendants seeking reconsideration of their application for a hearing pursuant to Franks v. Delaware, 438 U.S. 154 (1978).
During my deliberations on the legal issues presented for determination, I, sua sponte, raised the issue of "standing" on the part of the defendants to make the motion to suppress. More specifically, the addressee on each of the packages at issue is Advanced Distributing, the fictitious business name utilized by a corporation known as PPG Enterprises, Inc. This corporation is not a defendant in this proceeding. The expectancy of privacy would normally rest in the sender of the package and the recipient-addressee of the package. As a result, it would appear that the individual defendants herein had no reasonable expectation of privacy in the packages at issue. They were to be delivered to a business address and facility and presumably opened by staff employees of Advanced. However, the government has not asserted any claim contesting the right of the defendants to make the motion to suppress and has agreed to the filing and arguing of such motions. That being the case, I have not addressed this issue any further and make no finding or recommendation with respect to said issue.
The following constitutes my analysis of the facts and the law to be applied with respect to the issues submitted to me and my recommendation based on said analysis.
Sometime prior to December 2, 1993, a Buffalo Telemarketing Task Force ("Task Force") was created for the purpose of investigating and assisting in the prosecution of telemarketing companies engaging in fraudulent telemarketing practices. This Task Force is composed of representatives from various law enforcement agencies, including the FBI, Secret Service, United States Postal Authorities, and the New York State Police. The members of the Task Force work collaboratively with the United States Attorney's Office for the Western District of New York in carrying out their responsibilities. T. 20.2 For purposes of this Report and Recommendation, the principal members of the Task Force are Special Agent Elizabeth R. Rios of the FBI and State Investigator Thomas Flechsenhaar of the New York State Police.
One of the techniques utilized by telemarketing companies engaged in fraudulent telemarketing is described as either a "one in four" or a "one-in-five" sweepstakes wherein and whereby a victim is telephonically advised that he or she has won one of four, or one of five, valuable prizes such as a large-screen television or a pre-paid vacation. However, in order to be able to claim this prize, the victim must first purchase a particular product such as a water filtering system from the company at a purchase price of $600 or some other highly inflated price over the true value of the product in question. Elderly adults are the usual targets of this practice. T 24, 28-29, 32-33.
Advanced Distributing ("Advanced"), the assumed business name for PPG Enterprices, Inc. of which the defendants Geiger and Gerace are alleged to be the sole shareholders and officers, is located at 3109 Delaware Avenue, Kenmore, New York and is engaged in a telemarketing business. On or about December 2, 1993, a telemarketing fraud file on Advanced ("Advanced File") was opened by the Task Force as a result of a complaint having been filed by an alleged victim with the FBI. Thereafter, in 1994, numerous individual and law enforcement complaints against Advanced were noted in the file, which complaints were received from various locations in New York and New Jersey. T. 21-23, 40. Basically, these complaints indicated that customers of Advanced had not received the prizes that had been promised to them. Special Agent Rios became the case agent on the Advanced File in October, 1994, and at that time, she reviewed the file. Based on her experience in investigating telemarketing fraud, she concluded from this review that Advanced was engaged in a "one-in-four" or "one-in-five" scheme in carrying on its business activities. T. 24, 51-52.
Investigator Flechsenhaar testified that he has substantial experience in investigating telemarketing companies, including those that were engaged in one-in-four and one-in-five sweepstakes schemes. T. 192, 194-95.
On December 19, 1994, Investigator Flechsenhaar was contacted by James Castiglione who was the loss prevention manager for the Buffalo Office of United Parcel Service ("UPS"). Mr. Castiglione advised Investigator Flechsenhaar that a Mary A. Martinkovic from Aurora, Illinois had contacted UPS with a request that certain money which she had sent to Advanced via UPS be returned to her. T. 52-53, 172-74, 213-14, 222. Mr. Castiglione asked Investigator Flechsenhaar to call Ms. Martinkovic and determine whether "she wanted this deal [with Advanced] to be consummated, whether she was comfortable with the fact that she had forwarded the money." T. 153. Investigator Flechsenhaar called Ms. Martinkovic and interviewed her on the telephone which caused him to believe that she was confused about having sent money amounting to $1,500 to Advanced at its Delaware Avenue address in Kenmore, New York as a result of being told that she was a winner of additional monies. Nevertheless, according to Investigator Flechsenhaar, she requested that the UPS package that she had sent to Advanced be returned to her. T. 154-155, 224-25, 229, 255-56.
Prior to the December 19, 1994 contact by Mr. Castiglione, Investigator Flechsenhaar apparently had no knowledge of Advanced and its business activities. As a result of this contact, Investigator Flechsenhaar conducted a complete review of the Advanced File in the Task Force office. T. 198. He requested Mr. Castiglione keep him advised of any UPS packages addressed to Advanced when they arrived in the UPS Buffalo depot. Also, on or about December 19, 1994, Investigator Flechsenhaar conducted a physical surveillance of Advanced's offices at 3901 Delaware Avenue and made notes of the New York license plate numbers on the vehicles parked in the company's parking lot, some of which he later determined belonged to the individuals whom alleged victim-customers of Advanced identified as being the names of persons who had called them...
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