U.S. v. Namer
| Decision Date | 22 July 1982 |
| Docket Number | No. 80-3611,80-3611 |
| Citation | 680 F.2d 1088 |
| Parties | Blue Sky L. Rep. P 71,752 UNITED STATES of America, Plaintiff-Appellee, v. David Israel NAMER, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
John R. Martzell, John Wilson Reed, New Orleans, La., for defendant-appellant.
Pauline F. Hardin, Robert J. Boitmann, Asst. U. S. Attys., New Orleans, La., for plaintiff-appellee.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before CLARK, Chief Judge, GEE and GARWOOD, Circuit Judges.
David Israel Namer was convicted of various federal crimes arising out of a fraudulent loan brokerage scheme. The prosecution secured evidence used at his trial as a result of a search and seizure of Namer's complete office records conducted by Louisiana officials pursuant to a broad search warrant issued by a Louisiana magistrate. The district court denied Namer's motion to suppress evidence seized during and derived from the search. On appeal, Namer argues that the warrant was invalid under the probable cause and particularity clauses of the fourth amendment. 1 We reverse because there was not probable cause to support the warrant's issuance, and remand with instructions to the district court to conduct a hearing to determine whether Namer's conviction should be affirmed on grounds of harmless error, inevitable discovery, independent source, or attenuation.
Pauline Hardin, then an Assistant District Attorney in Orleans Parish, Louisiana, took charge of an investigation into the business affairs of David Namer in late 1976 or early 1977. Hardin and her coinvestigators, Assistant District Attorney Robert Barnard and New Orleans Police Officer James Dall, were members of the Economic Crime Unit of the Orleans Parish District Attorney's office. Namer and his company, National Financial Management Services, Inc., served in a general financial advisory capacity and, in particular, acted as loan brokers and assisted businesses and individuals, most of whom were engaged in the construction business, in obtaining loan commitments.
During the course of their investigation, Hardin and members of her team contacted Harry Stansbury, Deputy Commissioner of Securities for the State of Louisiana, to ascertain whether the loan commitments and loan commitment applications in which Namer was dealing were securities within the meaning of the Louisiana Blue Sky Law, La.Rev.Stat.Ann. §§ 51:701-720 (West 1965 & West Supp.1982). Stansbury opined in conversations with the investigation team that the loan instruments probably were securities within the meaning of the law, that they had not been registered with the Commission, and that Namer was not registered as a broker-dealer with the Commission. Based on Stansbury's opinion and on information from other sources that Namer was dealing in loan commitments, the investigation team applied for a warrant to search Namer's offices.
The search warrant application, 2 signed by Officer Dall and drafted by Hardin and Barnard, explained generally the course of the investigation, described specifically the transactions one named individual had with that Harry Stansbury, Deputy Commissioner of Louisiana Securities Commission (,) has advised the Orleans Parish District Attorney's Office that the offerings being made ... are classified as securities ... (,) that these offerings are not registered with them and that David Namer is not a licensed broker-dealer as required by law.
Namer, and placed at least one loan commitment on the premises of Namer's offices. Furthermore, the application stated
In the application, Namer's conduct in selling or offering to sell unregistered securities is alleged to be violative of two provisions of the Louisiana Blue Sky Law. The two provisions make it unlawful to sell unregistered securities, La.Rev.Stat.Ann. § 51:706(A), 3 and unlawful to sell securities without registering as a broker-dealer with the Securities Commission, id. § 51:710. 4
Based on the search warrant application, the magistrate issued a search warrant. The warrant authorized a sweeping search of Namer's offices for a wide variety of business papers. 5 Officer Dall and others executed the search warrant on the afternoon of its issuance. They seized and carried away all of the current working files, assorted correspondence, corporate and personal checkbooks, bank and financial statements, and various other items. The record does not indicate that any criminal action has been brought by the Orleans Parish District Attorney's Office predicated on the alleged Blue Sky Law violations cited as justifying the search warrant.
Pauline Hardin, the Assistant District Attorney who led the Economic Crime Unit's investigation of Namer, joined the federal government as an Assistant United States Attorney for the Eastern District of Louisiana shortly after the search. Within three months, a federal grand jury issued a subpoena to the state district attorney's office for the documents seized in the state search. Subsequently, Namer and two others were indicted by a federal grand jury and charged with conspiracy, wire fraud, and inducing persons to travel in interstate commerce for a fraudulent purpose. 6 Pauline Hardin, among others, signed the indictment.
The indictment, in essence, alleged that Namer acted criminally in three separate transactions which can most succinctly and accurately be denoted loan brokerage scams. In those transactions, Namer allegedly secured loan commitments for three clients from an insolvent lending institution. Namer, in concert with his brother and an officer of the lending institution, allegedly knew the loan commitments were worthless when he procured them and extracted brokerage fees.
Namer pled not guilty to each count of the indictment and filed a motion to suppress the evidence seized during and derived from the 1977 state search of his offices. After a hearing, the motion to suppress was denied. A jury found Namer guilty on four counts of the indictment. After the grant of a new trial on a ground unrelated to the present proceeding, Namer was again convicted on the same four counts.
Namer appeals the denial of his suppression motion. He also argues that collateral estoppel should have barred presentation of certain evidence at his second trial. We need reach only the first issue presented on appeal. Because there was not probable cause to support the issuance of the search warrant pursuant to which Namer's office was searched we reverse.
Namer's challenge to the Louisiana warrant pursuant to which his office was searched relies on both the probable cause and particularity clauses of the fourth amendment. At the outset, we note that the most striking aspects of the warrant are that it was premised on alleged criminal violations under a novel legal theory and that it authorized a search and seizure of virtually all of Namer's papers. As the First Circuit has cautioned, since the demise of the mere evidence rule 7 and the removal of business records from the self-incrimination protections of the fifth amendment, 8 the particularity and probable cause commands of the fourth amendment are "the only protection a citizen now has against a general search of his private papers." United States v. Abrams, 615 F.2d 541, 547 (1st Cir. 1980). While we do not suggest that the papers of white-collar criminal suspects are entitled to greater fourth amendment protection than the guns and knives of violent street criminals, we do not deny that the application of fourth amendment principles to the ferreting out of white-collar criminal conduct often requires a unique approach by investigating officers. Today's case, in which we hold that there was not probable cause to support the Louisiana warrant, graphically illustrates this point.
After conducting an approximately year-long investigation into Namer's business affairs, Assistant District Attorney Hardin and her colleagues settled on the theory that Namer had violated the Louisiana Blue Sky Law by failing to register the loan commitments as securities and by failing to register as a broker-dealer with the Securities Commission. That theory can be characterized, at best, as novel, and, at worst, as frivolous. 9
In applying for a search warrant, however, the District Attorney's Office camouflaged the novelty of the legal theory under which it was proceeding. The affidavit stated that Deputy Commissioner Stansbury had advised the Economic Crime Unit that the offerings being made by Namer "are classified as securities." Confronted with the statement that the offerings were "classified as securities," the magistrate was justified in concluding that there was probable cause to believe that a crime had been committed. However, the truth of the matter is that the Securities Commission had no formal procedure for classifying offerings as securities and that Stansbury gave the District Attorney's Office only a qualified opinion that the instruments in which Namer was dealing were securities. Our task is to determine whether the misrepresentation of the status of the offerings is material and reckless under the standards of Franks v. Delaware, 438 U.S. 154, 98 S.Ct. 2674, 57 L.Ed.2d 667 (1978). A conclusion that it is requires consideration of whether the remainder of the search warrant application alone would provide probable cause to believe that a crime had been committed.
The Supreme Court's decision in Franks v. Delaware, supra, outlines the consequences a false statement knowingly and intentionally, or with reckless disregard for the truth, was included by the affiant in the warrant affidavit, and if the allegedly false statement is necessary to the finding of probable cause, ..., (and that if), with the affidavit's false material set to one side, the affidavit's remaining content is insufficient to establish probable cause, the search warrant must be voided and...
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