United States v. Shah, Crim. No. 73-284.

• Decision Date: 01 March 1974
• Docket Number: Crim. No. 73-284.
• Parties: UNITED STATES of America v. Himanshu C. SHAH.
• Court: U.S. District Court — Eastern District of Pennsylvania

371 F. Supp. 1170

UNITED STATES of America v. Himanshu C. SHAH.

Crim. No. 73-284.

United States District Court, W. D. Pennsylvania.

March 1, 1974.

Kathleen Curtin, Asst. U. S. Atty., Pittsburgh, Pa., for plaintiff.

James E. McLaughlin, Pittsburgh, Pa., for defendant.

OPINION AND ORDER

SNYDER, District Judge.

The Defendant, Himanshu C. Shah, was charged with a violation of the Wire Fraud Statute, Title 18 U.S.C. § 1343.¹ The eleven count Indictment charged that during a period from on or about May 1, 1973, up to and including September 13, 1973, the Defendant made calls on specified dates from a telephone bearing the number XXX-XXX-XXXX in Pittsburgh to certain WATS (Wide Area Telephone Service) or "toll free" numbers throughout the country. After dialing the numbers, he would then, by means of an electronic device commonly referred to as a "blue box", place a multifrequency tone over the telephone wires (a 2600 cycle per second tone) which would activate the Telephone Company's switching equipment and thereby by-pass the Company's billing system. The Defendant would then place additional tones upon the telephone line, thereby effecting a connection with various individuals in different cities of the United States (See Appendix), Japan, China, and India. Since the Telephone Company would have no record of the interstate and international telephone calls made by the Defendant, he would not be billed for these calls.

The Defendant has moved to suppress two reels of tape recorded by Agents of the Telephone Company as the result of the carrier's electronic surveillance of his telephone. These tapes were turned over to the Federal Bureau of Investigation (F.B.I.) A hearing on the Defendant's Motion was held on January 24, 1974. The only witness called was Mr. John R. Harding, Jr., a Senior Security Agent of the Bell Telephone Company.

On the basis of an analysis of certain computer printouts used in the ordinary course of business to detect uncharged calls, it was suspected by mid-August that the Defendant may have been using equipment which by-passed the Company's billing system. On August 27, 1973, Harding initiated a daily computerized survey of the Defendant's telephone. By utilizing certain sophisticated electronic equipment, the Company was able to detect when the "blue box" was used and the "blue box" would activate additional multifrequency equipment. The equipment would record the digits corresponding to the multifrequency tones pulsed by the "blue box". The 2600 cycle tone also activated a mechanism on the detection equipment which permitted the recording of the beginning portion of any subsequent phone conversation, whether it was with overseas operators or with private persons. The recording was limited to the first minute of conversation. The Agent testified that on one occasion, the name Himanshu Shah was identified.

After contacting the F.B.I. on September 4, 1973, none of the F.B.I. Agents listened at any time to the conversations being recorded. Mr. Harding further testified unequivocally that it was he personally, without any arrangement with the F.B.I., who had managed all portions of the investigation in order to discover if the Bell Telephone Company's billing system was being circumvented but that the tapes were made after they knew the number from which the calls were being made. After he accumulated all of the necessary information and data (including the tapes of the conversations), he turned everything over to the F.B.I.

The question that this Court must decide is: Can a communications carrier conduct an electronic surveillance by tape recording of a subscriber's telephone in light of Title III of the Omnibus Crime Control and Safe Streets Act of 1968 and its prohibitions pertaining to the interception and disclosure of oral communications?

The Omnibus Act (Title 18 U.S.C. § 2511) prohibits interception (except as specified) of oral communications. One exception carved out of the Statute is as follows:

"(2)(a)(i) It shall not be unlawful under this chapter for an operator of a switchboard, or an officer, employee, or agent of any communication common carrier, whose facilities are used in the transmission of a wire communication, to intercept, disclose, or use that communication in the normal course of his employment while engaged in any activity which is a necessary incident to the rendition of his service or to the protection of the rights or property of the carrier of such communication: Provided, That said communication common carriers shall not utilize service observing or random monitoring except for mechanical or service quality control checks.

(ii) It shall not be unlawful under this chapter for an officer, employee, or agent of any communication common carrier to provide information, facilities, or technical assistance to an investigative or law enforcement officer who, pursuant to this chapter, is authorized to intercept a wire or oral communication.

As amended Pub.L. 91-358, Title II § 211(a), July 29, 1970, 84 Stat. 654."

The question arises in the instant case when the carrier admittedly recorded conversations of the Defendant solely for the purpose of gathering information to be turned over to the authorities to aid in the prosecution of the Defendant.

Since the passage of Title III of the Omnibus Crime Control Act in 1968, there have been no reported cases to which the attention of this Court was directed which deal with the right of a telephone company under 18 U.S.C. § 2511(2)(a)(i) and (2)(a)(ii) to electronically record private conversations of one of its subscribers when the carrier already has sufficient information in its possession to protect its billing procedures. The legislative history of Title III of the Omnibus Crime Control Act of 1968 disclosed a Congressional intent that Subparagraph (2)(a) would not change the prior law in this area. At page 2182 of 2 U.S.Code Cong. and Admin.News (1968) it is stated:

"Paragraph (2)(a) provides that it shall not be unlawful for an operator of a switchboard or employees of a common carrier to intercept, disclose, or use wire communications in the normal course of their employment while engaged in any activity which is a necessary incident to the rendition of his service or the protection of rights or property of the carrier. It is intended to reflect existing law (United States v. Beckley, 259 F.Supp. 567 (D.C.Ga.1965))." (Emphasis supplied).

Prior to 1968, a number of cases had arisen under Title 47 U.S.C. § 605 of the Federal Communication Act,² which held that there had to exist reasonable grounds for belief that a person using the telephone lines was exceeding his right to the lines before a telephone company could monitor the user's calls.

In United States v. Beckley, supra, the question before the Court was whether an indictment based upon evidence discovered by the Government directly from tapes received from the phone company, which had monitored the defendant's calls, should be suppressed as a violation of the defendant's Fourth Amendment rights and their rights to privacy under 47 U.S.C. § 605. The defendants were charged with a violation of the Wire Fraud Statute by devising a scheme to deprive the Telephone Company of monies due and payable for long distance telephone calls by causing the Company to extend to the defendants (via one of its employees) its facilities for unlawful purposes (conducting gambling operations). An employee of the phone company would allow long distance calls to be made without charge and in a manner which by-passed the regular bookkeeping procedures of the company. The Court found that the only reasonable means of protection for the phone company was the monitoring of the calls. The Court said at 259 F.Supp. at pages 571 and 572:

"Section 605 does not prohibit the telephone company from monitoring its own lines. The restrictions placed on the telephone company by Title 47 of the United States Code does not deprive the telephone company of the right to employ reasonable means to detect and prevent violations thereof by its own employees. Where, as is here alleged, a corrupt employee allows long distance calls to be covertly made without charge and in a manner which bypasses the regular bookkeeping procedures of the company the only reasonable means of protection is the monitoring of such calls.

* * * * * *

A protection intended and afforded by 47 U.S.Code, § 605 does not avail the defendants under the circumstances alleged in this indictment. See United States v. Gallo, 123 F.2d 229, 231 (2 Cir.); United States v. Gris, 247 F.2d 860, 864 (2 Cir.).

As was said in Casey v. United States, 191 F.2d 1, 4 (9 Cir.) reversed on other grounds, 343 U.S. 808, 72 S.Ct. 999, 96 L.Ed. 1317:

`* * * 47 U.S.Code 605, which prohibits the interception and divulgence of communications without the consent or approval of the sender, refers to communications over licensed facilities. The appellants were unlicensed operators transmitting voice messages over an unlicensed station, without call letters, on a portion of the band reserved for Morse Code operations. The protections of the Act were never intended for, nor do they cover, such communications which are themselves illegal.' (Emphasis supplied)

See also Sugden v. United States, 226 F.2d 281, 285 (9 Cir.).

The telephonic conversations of the defendants were not monitored in violation of the Fourth Amendment nor 47 U.S.C. § 605 and should not be suppressed." (Emphasis supplied)

In Bubis v. United States, 384 F.2d 643 (9th Cir. 1967), the Telephone Company had reason to believe that one of its subscribers was using a device designed to circumvent the Telephone Company's automatic record keeping equipment. The Company connected certain automatic monitoring equipment to the subscriber's phone which recorded all of his outgoing and incoming calls. The equipment was maintained from December 20, 1965 to March 24, 1966, without the knowledge...