U.S. v. Offices Known as 50 State Distributing Co., 82-5671

• Citation: 708 F.2d 1371
• Decision Date: 06 July 1983
• Docket Number: No. 82-5671,82-5671
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. The OFFICES KNOWN AS 50 STATE DISTRIBUTING CO., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1371

708 F.2d 1371

UNITED STATES of America, Plaintiff-Appellant, v. The OFFICES KNOWN AS 50 STATE DISTRIBUTING CO., Defendant-Appellee.

No. 82-5671.

United States Court of Appeals Ninth Circuit.

Argued and Submitted March 16, 1983.

Decided May 25, 1983.

Rehearing Denied July 6, 1983.

Joel M. Gershowitz, Washington, D.C., Lamond R. Mills, U.S. Atty., Brian L. Sullivan, Asst. U.S. Atty., Las Vegas, Nev., for plaintiff-appellant.

Annette R. Quintana, Oscar Goodman, Las Vegas, Nev., for defendant-appellee.

On Appeal from the United States District Court for the District of Nevada.

Before MERRILL, CHOY and SNEED, Circuit Judges.

MERRILL, Circuit Judge.

The United States appeals from the District Court's order granting a motion by Appellee 50 State Distributing Co., for the return of improperly seized property, pursuant to Rule 41(e), F.R.Crim.P. The search in question was executed by agents of the United States Postal Service on October 19, 1981, pursuant to a warrant, and resulted in virtually all of 50 State's business records being seized.

FACTS

On October 19, 1981, following several weeks of investigation, the United States Postal Service obtained a warrant from a United States Magistrate authorizing the search of 50 State's place of business in Las Vegas, including "all persons" on the premises. The warrant authorized the seizure of certain property, as follows:

lead source material, invoices, sales orders, order forms, books, records (magnetic or typewritten), ledgers, correspondence, pitches (written or taped), typewriters, premiums, gifts, supplies, and/or merchandise, United States Postal Service Money Orders, United States Postal Service C.O.D. firm mailing records, and other evidence and instrumentalities for numerous on-going violations of Title 18, United States Code, Sections 1341 (Mail Fraud), 1342 (Fictitious Names) and 371 (Conspiracy).

The warrant was based on and incorporated the affidavit of Postal Inspector Wayne E. Gray. The affidavit described 50 State as a national supplier of advertising specialty products such as ball point or felt tip pens, key chains and calendars, all bearing the name and advertising message of the purchaser. It described 50 State's business as directed at small businesses nationwide and a "boiler room" sales operation which engaged in fraud and misrepresentation in selling its promotional merchandise. Gray's affidavit was 27 pages in length and was based in part upon information supplied by a private investigator who gained employment for a time with 50 State; by brand name manufacturers that 50 State According to the affidavit, the private investigator had been enrolled in a one-week training course where he had been instructed by an officer of 50 State in the techniques of successful selling of the company's merchandise. The private investigator had observed and overheard seven or more of the company's salesmen at work and reported in detail on his observations. He stated that it was the general practice of the salesmen to telephone prospective customers and inform them that they had been selected to receive a gift, such as a diamond, money clip, steak knife set, perfume, or Betamax recorder. The salesman would then inform the prospect that in order to receive the free gift or to be eligible for another drawing he would have to purchase some of the advertising specialty products. The salesman would claim to have for sale brand name, high-quality merchandise which he would send to buyers through the mail C.O.D. The merchandise was in fact of shoddy quality and the gifts either did not materialize or were substantially worthless.

falsely claimed to represent; and by several victims of 50 State's fraudulent conduct.

The affidavit contained the following statement:

I have investigated similar patterns of conduct as described in this affidavit for the past four years. I have also investigated other types of schemes for the past ten years. I have participated in ten business searches involving similar type schemes. It has been my experience that employees carry "lead source" material in and out of these "boiler rooms" in their briefcases, sacks, purses or on their person. In the past, they have attempted to conceal material damaging to themselves, on their person, or leave with this material when allowed to vacate the premises.

It concludes with affiant's statement of his opinion as follows:

It is my belief that 50-State Distributing Company, Inc., et al., 3044 South Highland Drive, Las Vegas, Nevada, 89102, is at the present time executing a scheme and artifice to defraud and to obtain money and property from businesses and various other organizations by means of false and fraudulent pretenses, to wit: that business owners have been selected by computer, and have won gifts such as diamonds, playboy money clips, etc., and may purchase high-quality name brand pens, calendars, etc., at low prices, and that the C.O.D. packages and returned U.S. Postal Money Orders to and from said businesses and organizations have been mailed or received by 50-State Distributing et al, and that this scheme is being conducted by persons known and unknown on the premises described herein, wherein "pinks," lead source material, invoices, sales orders, order forms, books, records, ledgers, correspondence, pitches (written or taped), typewriters, premiums, gifts, supplies and/or merchandise, United States Postal Service Money Orders, United States Postal Service C.O.D. firm mailing records, and other evidence and instrumentalities of numerous ongoing violations of Title 18, U.S.Code, Section 1341 (Mail Fraud), Title 18, United States Code, Section 1342 (Fictitious Names) and Title 18, United States Code, Section 371 (Conspiracy) are to be found.

At or about 9:00 a.m. on October 20, 1981, 43 agents of the Postal Service and several Las Vegas police officials entered the premises of 50 State and executed the search warrant. At least 300 employees of 50 State were present, plus at least two visitors. Local police officers helped secure the entrances and exits to the building. The Postal Inspectors required all persons to remain seated at their desks or in their respective work areas. No one was permitted to leave the premises or, without an escort, to go to the restroom.

The Inspectors required each person on the premises to fill out an identification form and that each person be photographed before the individual was permitted to leave. Those who did not have proper identification were required to remain in a holding area until their identity could be checked with the Nevada Department of Motor Vehicles. One employee, Donna During the search the Postal Inspectors seized business items, such as tape recorders, tapes, merchandise, stationery, business forms, files, and envelopes, as well as some personal items, including family pictures, foreign coins, cash, personal papers, and Christmas toys for an employee Christmas party. Some quantities of documents were seized after only spot checks as to their relevance. Materials were hauled away by vans. Also during the course of the search the door to the records room was broken down following several unsuccessful attempts to locate the key. The Inspectors also damaged 50 State's Lektriever, an automatic filing machine.

Hara, was told that failure to fill out the identification form could result in further detention or arrest. Some employees asked to telephone their attorneys, but the Inspectors refused until the search was concluded. Another employee without proper identification, Margaret Campbell, was taken to the restroom by a female agent who searched her slip and brassiere (which search the District Court termed a "strip search".)

On motion by 50 State under Rule 41(e), F.R.Crim.P., the District Court on April 7, 1982, ordered the government to return the seized property, concluding that the search warrant was a "general warrant" which failed to satisfy the Fourth Amendment's requirement of particularity as to the items to be seized and the persons to be searched, and that the execution of the warrant was unconstitutional in that the Inspectors ran "roughshod" over the constitutional rights of 50 State and some of its employees.

The government has taken this appeal.

VALIDITY OF THE WARRANT

The Fourth Amendment requires that for a warrant to be valid, it must "particularly describ[e] the place to be searched, and the persons or things to be seized." This particularity requirement makes "general searches under [a warrant] impossible and prevents the seizure of one thing under a warrant describing another. As to what is to be taken, nothing is left to the discretion of the officer executing the warrant." Marron v. United States, 275 U.S. 192, 196, 48 S.Ct. 74, 76, 72 L.Ed. 231 (1927); see Andresen v. Maryland, 427 U.S. 463, 480, 96 S.Ct. 2737, 2748, 49 L.Ed.2d 627 (1976); United States v. Williams, 687 F.2d 290, 292 (9th Cir.1982); United States v. Cardwell, 680 F.2d 75, 77 (9th Cir.1982); United States v. Hillyard, 677 F.2d 1336, 1339 (9th Cir.1982).

In this case the government argues that the search warrant met the particularity requirement. It argues, first, that the warrant sufficiently removed discretion from the executing officers in that the warrant essentially authorized the seizure of all the business-related books, records, equipment and merchandise on Appellee's premises. Second, it argues that the breadth of the warrant was justified by the breadth of probable cause in view of Inspector Gray's affidavit. It argues that Gray's affidavit evidenced a pervasively...