United States v. Avery
| Decision Date | 05 February 2016 |
| Docket Number | CRIMINAL CASE NO. 1:14-CR-00379-MHC-JFK |
| Parties | UNITED STATES OF AMERICA v. ANDREW AVERY, Defendant. |
| Court | U.S. District Court — Northern District of Georgia |
Defendant Andrew Avery is charged in a twelve count indictment with violations of 18 U.S.C. §§ 1343, wire fraud, and 1341, mail fraud, in connection with an alleged scheme to defraud the investors of New Day Atlanta Financial ("NDA") and the Magnolia Real Estate Fund ("Magnolia Fund"). [Doc. 1]. Pending before the court are Defendant's motions [Docs. 17 and 23] to suppress documents and emails obtained by Lee Marks, who was formerly Defendant's business partner and then a contract employee at NDA, and who, subsequently as part of a cooperation agreement, turned those documents over to the Government. Defendant contends that the seizure of the documents by Marks and subsequent relinquishment of the documents to the Government in response to a federal grand jury subpoena duces tecum violated his Fourth and Fifth Amendment rights, as well as "separation of powers," and that Mark's conduct violated 18 U.S.C. §§ 2510 and 2701, as the documents were seized from email accounts, requiring suppression. [Id.; Doc. 59]. The Government opposes the motions to suppress contending that Defendant's rights were not violated because Marks was not acting at the Government's direction when he acquired the materials and information, that the Government's subsequent review of the materials and information did not exceed Marks' private search, that the Government did not improperly use the grand jury to obtain the materials and information and that the electronic surveillance provisions do not provide for suppression of the emails. [Doc. 62]. A limited evidentiary hearing, held solely for the purpose of determining the circumstances surrounding Mark's acquisition and relinquishment of the materials and information, was held on October 14, 2015. [Doc. 57].
Also pending before the court are Defendant's motion [Doc. 28] to suppress statements (a deposition) made to the Securities and Exchange Commission ("SEC"), alleging violation of his Fifth and Sixth Amendment rights, motion [Doc. 29] to suppress documents produced to the SEC, alleging violation of his Fifth and Sixth Amendment rights, and motion [Doc. 30] to suppress documents produced by the Receiver for NDA, who was appointed by District Judge Batten as part of the civil SEC proceedings, to the Government, alleging violation of his Fourth and FifthAmendment rights. The Government opposes the motions to suppress. [Docs. 41 and 42]. As will be discussed, infra, finding that Defendant did not present sufficient factual allegations to warrant an evidentiary hearing on these motions, the court addresses the motions [Docs. 28, 29 and 30] to suppress based on the Government's and Defendant's arguments set forth in their briefs.
As noted, Defendant contends that his Fourth, Fifth and Sixth Amendment rights were violated by the Government's receipt of his deposition testimony, taken by and during the SEC investigation, and of the business documents he produced to the SEC during that investigation, and receipt from the Receiver of NDA business documents. Defendant asserts that an evidentiary hearing is necessary for the Government to establish that his rights will not be violated by use of this information at a trial on the charges in the indictment. [Docs. 28, 29, 30]. The Government responds, as regards the testimony taken by the SEC and documents received by the SEC, that Defendant failed to allege sufficient facts to place into question a violation of his constitutional rights, that Defendant's Sixth Amendment right to counsel had not attached at the time of the SEC investigation, that - to the extent the Fifth Amendment was applicable to his deposition testimony and the production of the documents - his failure to assert thatright at the time constitutes a waiver of the privilege against self-incrimination, and that his due process rights were not violated by the SEC's production of the information to prosecuting authorities. [Doc. 41]. And, with respect to the documents obtained from the Receiver, the Government asserts that Defendant lacked a reasonable expectation of privacy in the documents required to challenge the admissibility of that information at trial. [Doc. 42]. For the reasons stated infra, the court recommends denying Defendant's motions to suppress.
Defendant offers very little in the way of factual assertions in support of his motions to suppress. He contends that the indictment "arises from the operations of the company [NDA] and its affiliate companies and businesses during the time frame of April 2007 to May 2010." [Doc. 28 at 1; Doc. 29 at 1]. Defendant and Lee Marks were initially co-equal partners in the business, and, in late 2008, Defendant became the sole owner of the business operations. [Id.]. Defendant alleges that in 2010, the SEC "opened an investigation of NDA" and, in the course of the investigation, "compelled [Defendant] to appear for a deposition on March 23, 2010 by subpoenaing him to do so." [Doc. 28 at 2]. And the SEC "compelled [Defendant] as the owner and operator of NDA and its affiliated companies to produce . . . records and documentsrelated to the operations of NDA and its affiliated companies." [Doc. 29 at 2]. During this time, Defendant - and his former partner Lee Marks - were represented by Gregory Bartko who was under indictment for securities fraud in the Eastern District of North Carolina. [Doc. 28 at 2; and see United States v. Bartko, Criminal Case No. 5:09-CR-321, E.D. N.C.]. According to Defendant, in the criminal case, "which ensued from the SEC's investigation," the Government produced in discovery Defendant's SEC deposition and documents he produced to the SEC. [Doc. 28 at 2; Doc. 29 at 2].
With respect to the Receivership, Defendant only alleges that in connection with the SEC investigation, NDA "was first placed into monitorship and later into receivership" and that the Government obtained documents from the Receiver "pertaining to the operations of [NDA]." [Doc. 30 at 1-2]. Defendant states that he has no information as to how the Government obtained the documents. [Id. at 2].
The Government's response to Defendant's motions fills in the gaps left by Defendant's allegations of fact. In March 2010, the SEC opened the investigation of NDA for violation of the securities laws and issued subpoenas from March 8, 2010, to March 31, 2010, to NDA, Defendant, Lee Marks and NDA's accountant. [Doc. 41 at 2, 4]. On March 23, 2010, the SEC deposed Defendant pursuant to a subpoena, and at the beginning of the deposition, the SEC attorney advised Defendant as follows:
This is an investigation by the United States Securities and Exchange Commission In the Matter of NDA Financial, file number A-03215, to determine whether there have been violations of certain provisions of the federal securities laws. However, the facts developed in this investigation might constitute violations of other federal or state, civil or criminal laws.
[Doc. 30, Exhibit 1 ("Deposition") at 5-6, 7-8]. Defendant was then asked if he had received and reviewed the SEC's Supplemental Information Form 1662, which was made a deposition exhibit. Defendant responded that he had and that he had no questions about the form. [Deposition at 6].
That form advised Defendant that he was entitled to be represented by counsel at all times and to consult with that attorney. [Doc. 30, Exhibit 2 ("Supplement Information Form") ¶ B. 2]. The form further advised in pertinent part as follows:
[Id. ¶¶ B. 2 & 5]. And under the headings, Authority for Solicitation of Information and Effect of Not Supplying Information, Defendant was advised in pertinent part as follows:
[Id. ¶¶ E, F]. And, finally, under the heading Principal Uses of Information, Defendant was advised that, although the principal purpose of acquiring information is for the SEC's use, "[f]acts developed may, however, constitute violations of other laws or rules" and that "[i]nformation provided may be used in Commission and other agency enforcement proceedings." [Id. ¶ G]. And, under the heading Routine Uses of Information, Defendant was advised, [Id. ¶ H]. A long list of the other routine uses of information provided to the SEC is then...
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