U.S. v. Maali

• Decision Date: 08 August 2004
• Docket Number: No. 6:02-CR-171-ORL28KRS.,6:02-CR-171-ORL28KRS.
• Citation: 346 F.Supp.2d 1226
• Parties: UNITED STATES of America v. Jesse Issa MAALI, M. Saleem Khanani, Big Bargain World, Inc., SS Mart, Inc., Jeans Unlimited, Inc., Denim Unlimited, Inc., Barakat Corporation, Barakat International, Inc., David Portlock
• Court: U.S. District Court — Middle District of Florida

Page 1226

346 F.Supp.2d 1226

UNITED STATES of America v. Jesse Issa MAALI, M. Saleem Khanani, Big Bargain World, Inc., SS Mart, Inc., Jeans Unlimited, Inc., Denim Unlimited, Inc., Barakat Corporation, Barakat International, Inc., David Portlock

No. 6:02-CR-171-ORL28KRS.

United States District Court, M.D. Florida. Orlando Division.

August 8, 2004.

COPYRIGHT MATERIAL OMITTED

Robert Alan Leventhal, Leventhal & Slaughter, Mark E. Nejame, Nejame, Harrington & Barker, P.A., Jesse Issa Maali, Russell Eugene Crawford, Law Office of Russell E. Crawford, Orlando, FL, Mark P. Schnapp, Greenberg Traurig, P.A., Miami, FL, Tucker H. Byrd, Greenberg Traurig, P.A., Gregory N. Miller, Law Office of A. Brian Phillips, P.A., M. Saleem Khanani, Donald A. Lykkebak, Law Office of Donald A. Lykkebak, Charles M. Greene, Law Office of Charles M. Greene, P.A., Orlando, FL, W. Bryan Park, II, Law Offices of W. Bryan Park II, Khan Aslam, Winter Park, FL, Roland Augustine Hermida, Roland A. Hermida, Tampa, FL, John David Galluzzo, John D. Galluzzo, P.A., Saeedullah Awan, Fern Park, FL, Donald R. West, Law Office of Donald R. West, Robert James Buonauro, Law Office of Robert J. Buonauro, Mahmood Jamal, Mark E. Nejame, Nejame, Harrington & Barker, P.A., Orlando, FL, Joseph A. Fisher, III, Chandler Robinson Muller, Law Office of Chandler R. Muller, Robert B. White, Jr., Sobering, White & Luczak, P.A., David Portlock, Winter Park, FL, for Defendants.

Cynthia Hawkins Collazo, U.S. Attorney's Office Middle District of Florida, Orlando, FL, for Plaintiff.

ORDER

ANTOON, District Judge.

The Defendants¹ in this case have been charged in a 71-count Third Superseding Indictment with crimes involving employment and harboring of aliens and tax evasion.² This Order addresses the Defendants' motions to suppress evidence seized during a wide-scale search and seizure operation that was conducted in November 2002.³ Having considered the parties' written submissions and oral argument, as well as the evidence and testimony presented at a nine-day evidentiary hearing, the Court concludes that the Defendants' motions shall be granted in part and denied in part. Some, but not all, of the seized evidence shall be suppressed.

I. Background

Defendants Jesse Maali ("Mr. Maali") and M. Saleem Khanani ("Mr. Khanani") are businessmen who own and operate several businesses together in the Orlando, Florida area. Mr. Maali and Mr. Khanani also are each involved in other businesses independent of one another, that is, in which the other of them has no interest. Among the businesses in which they are both involved are Defendants Big Bargain World, Inc. and SS Mart, Inc., entities which in turn own several "Big Bargain World" ("BBW") stores that sell retail merchandise, primarily to tourists. Mr. Maali and Mr. Khanani are also the sole officers and shareholders of Sports Dominator Inc., a BBW spinoff that sells sports-related retail merchandise in "Sports Dominator" stores. Defendant David Portlock ("Mr. Portlock") is an accountant who has performed accounting services for Mr. Maali, Mr. Khanani, and their businesses; his accounting business also has many other clients who are in no way connected with this case.

On November 6, 2002 — the same day that an Indictment was filed under seal against most of the current Defendants⁴ — United States Magistrate Judge James G. Glazebrook authorized search warrants for thirteen locations: seven BBW stores; two Sports Dominator stores; a BBW corporate office/warehouse; the office of Mr. Portlock; the office of Maali Enterprises; and the residence of Mr. Maali. Additionally, on November 14, 2002, after searches of the first thirteen locations had begun, United States Magistrate Judge David A. Baker authorized a search warrant for a fourteenth location — a Shurgard storage unit that had been rented by Mr. Portlock. These search warrants were issued after the magistrate judges had been presented with a 59-page, 93-paragraph "Master Affidavit" (Khanani Ex. 14)⁵ sworn to by Agent Donald Buechner of the Immigration and Naturalization Service ("INS"), now known as Immigration, Customs, and Enforcement ("ICE"). The fourteenth warrant was also supported by an additional affidavit attested to by DEA Special Agent Timothy Jones. (See Government's Ex. 14).

In the Master Affidavit, Agent Buechner described an investigation by a multi-agency task force of Mr. Maali and his businesses that had been underway since 1999. Agent Buechner stated that based on that investigation, there was probable cause to believe that searches of thirteen sites would

lead to evidence of violation of federal law, including but not limited to: Title 8, United States Code, Section 1324(a)(1)(A)(iv), (encouraging or inducing undocumented aliens to come to, enter, or reside in the United States): Title 8, United States Code, Section 1324(a)(1)(A)(v)(I) (conspiracy to violate); Title 8, United States Code, Section 1324(a)(1)(A)(v)(II), (aiding and abetting the commission of any 1324(a)(1)(A) offense); Title 8, United States Code, Section 1324(a)(1)(A)(iii), (harboring aliens); and Title 26, United States Code, Sections 7201 and 7206, (Evasion of Employment Tax and False Employment Tax Returns).

(Master Aff. at 2 ¶ 3).

In the Master Affidavit, Agent Buechner recounted the task force's investigation of the subject businesses, the employment of aliens⁶ by some of those businesses, and the manner in which the aliens were paid so as to avoid both detection by immigration officials and employment taxes. The task force investigators had determined through analysis of records and from conversations with cooperating informants that aliens had been employed at BBW stores "during the period January 1, 1999 through October 2002, ... and an elaborate scheme was used to hide payments to those aliens and disguise them as legitimate business transactions." (Master Aff. at 4 ¶ 10). The payments were hidden through the establishment and use of four "shell company" accounts which were funded by proceeds from the retail sales of the businesses — proceeds which were disguised as operating expense payments to supposed vendors.

The Master Affidavit lists by name more than fifty employees who were determined either never to have been authorized to work at Big Bargain World, not to have been authorized during at least part of their employment, or to have been paid from the shell company accounts but not reported as employees to the Florida Department of Revenue or the IRS. (Master Aff. at 8-25 ¶¶ 18-20). Also listed as to these employees are dates of birth, country of citizenship (where known), dates of entry into the country, and the amounts of payments received by them. (Master Aff. at 8-25 ¶¶ 18-20). At least six of the employees paid through the four shell company accounts were listed as employees of Sports Dominator on Sports Dominator's Florida unemployment tax returns for 2000 and 2001. (Master Aff. at 47 ¶ 73).

The Master Affidavit states that while "legitimate" employees of the businesses were paid regular wages through payroll bank accounts by a payroll company used by the businesses, between 1999 and 2001 unauthorized aliens were paid through a separate system using the accounts of the four shell companies — entities named T & S Printing, Florida Freight, Rainbow Merchandising, and Center Care Maintenance. (Master Aff. at 6-7, 8 ¶ 17). The shell company accounts had been established in 1999 by two BBW employees, Defendants Khan Aslam and Saeedullah Awan, who were under the direct control of Mr. Maali and Mr. Khanani. (Master Aff. at 6-7 ¶ 14).

During 1999, 2000, and 2001, checks were written from the accounts of these shell companies to pay the unauthorized aliens' wages. (Master Aff. at 5 ¶ 12). However, in June 2001 — shortly after grand jury subpoenas were served on the banks that held the shell companies' accounts — the payments from these accounts stopped, and after that date the aliens were instead paid with cash. (Master Aff. ¶¶ 12, 16). Additionally, shortly after the grand jury subpoenas were served, three of the shell company accounts were closed, and activity in the fourth shell company account ceased. (Master Aff. at 7 ¶ 16).

These four "shell companies provided no discernable service to their owners and were set up exclusively to conceal the criminal activity." (Master Aff. at 6 ¶ 14). The shell company accounts were funded by sales and rental income from Mr. Maali and Mr. Khanani's businesses; the Master Affidavit states that "[b]etween February 1999 and May 2001, approximately $2.25 million of Maali and Khanani sales and rental income was used to fund the four shell companies' accounts, which were in turn used to pay the unauthorized alien and other employees working at Big Bargain World stores, the corporate office, and the warehouse." (Master Aff. at 7 ¶ 15).

The disguising of payments as expenses was achieved as follows. Funds received from sales of merchandise were deposited into "depository accounts," and then transfers were made to expense accounts; as funds were needed to pay unauthorized alien employees, checks were written on expense accounts payable to one or more of the four shell companies, who then wrote checks to the unauthorized employees. (Master Aff. at 28 ¶ 25). The funds that were deposited into the four shell company accounts came from eight different bank accounts controlled by Mr. Maali and Mr. Khanani, including accounts in the names of Defendants Big Bargain World, Inc., SS Mart, Inc., Denim Unlimited, Inc., Jeans Unlimited, Inc., and Barakat Corporation. (Master Aff. at 28-29 ¶ 25). The checks were signed by Mr. Maali or Mr. Khanani. (Master Aff. at 29 ¶ 25). Many of the aliens' paychecks were then cashed at the BBW stores. (Master Aff. at 29 ¶ 25).

The wages that were paid through the four shell company accounts were not reported on employment tax returns filed with the State of Florida or the IRS. (Master Aff. at 29 ¶ 27)....