United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER
C. Nye Chief U.S. District Judge
before the Court is Defendant David Hansen's Motion for
an Evidentiary Hearing and to Suppress (Dkt. 36) and Notice
of previously unavailable standing evidence (Dkt. 60). The
United State of America (“the Government”)
opposes the Motion.
Motion to Suppress, Hansen moves the Court for two things:
(1) a Franks hearing to challenge the veracity of
the warrant affidavit, and (2) the suppression of all
evidence seized pursuant to the warrant. The Court has
already ruled on the first issue. Dkt. 65. In its prior
order, the Court denied Hansen's motion for a
Franks hearing, but reserved ruling on the remainder
of the Motion to Suppress until a hearing could be held.
also worth noting that in preparation for the (then
scheduled) suppression hearing, Hansen served Rule 17(c)
subpoenas on two individuals who were expected to testify.
The Government moved to quash the subpoenas. Dkt. 75. The
Court granted the same. Id. In so doing, the Court
further narrowed the focus of the suppression inquiry.
Id. at 15-19.
Court held oral argument on September 24, 2019, and took the
remaining issues under advisement. The Court allowed the
parties an opportunity to file closing briefs to summarize
their positions in light of the evidence presented at the
hearing. The Court has received and reviewed the parties'
supplemental briefs. Upon review, and for the reasons
outlined below, the Court DENIES Hansen's Motion to
Government has charged Hansen with several counts of wire
fraud and tax violations. The charges followed a search of
Yellowstone Partners, LLC's (“Yellowstone”)
premises, located in Idaho Falls, Idaho. At the time, Hansen
was the CEO and owner of Yellowstone, an investment advisory
search warrant in this case was predicated on a warrant
affidavit written by FBI Special Agent Drew McCandless
(“SA McCandless”). SA McCandless submitted the
affidavit after interviewing current and former Yellowstone
employees and an SEC investigator. In the affidavit, SA
McCandless described how Yellowstone targeted certain
customer accounts in an overbilling scheme. The affidavit
also described how employees and customers raised their
concerns with Hansen and with Yellowstone's Chief
Compliance Officer, Cameron High,  only to have Hansen and High
create excuses for the overbilling and pretend to resolve the
problems. Additionally, Yellowstone often struggled to pay
its own bills on time, yet Hansen used the Yellowstone
operating account to pay his mortgage and loan payments for
his Ferrari, a Falcon jet, and helicopter, which were held in
separate LLCs. Based upon these and other facts, SA
McCandless applied for a warrant to search Yellowstone for
evidence of wire fraud, money laundering, and engaging in
monetary transactions in property derived from specified
States Magistrate Judge Ronald E. Bush issued a warrant
authorizing officers to search Yellowstone for information on
servers, hard drives, and other media storage devices, as
well as for hard copies of relevant documents. The search was
primarily for financial records of Yellowstone, High, and
Hansen. Officers imaged data and seized physical evidence.
They specifically searched three offices: Hansen's
office, High's office, and Kaylynn Dalebout's
office. They also searched the basement of the
building where Yellowstone's server was located.
effectively Hansen's third attempt to suppress the
evidence from that search. First, Hansen moved for a
protective order preventing the Government from using any of
the obtained electronically stored information
(“ESI”) gleaned from the search. The Court denied
that motion. Dkt. 50. Second, Hansen requested a
Franks hearing to challenge the veracity of the
underlying warrant affidavit. The Court denied that request.
Dkt. 65. Now, in his third attempt, Hansen moves the Court to
suppress all of the evidence obtained from the search. Hansen
argues there was no probable cause for the warrant, or
alternatively, that even if there was probable cause, the
execution of the warrant violated his Fourth Amendment rights
because the search exceeded the scope of the warrant and the
Government took too long to search the ESI.
Government responds by first arguing that Hansen does not
have standing to challenge the warrant. The Government also
argues that the good faith and inevitable discovery doctrines
apply, meaning the Court cannot suppress the evidence because
the Government was doing what it thought was correct under
the warrant and because it would have inevitably obtained
this same information through alternate means. According to
the Government, either of those two arguments make it
unnecessary to wade into the probable cause and reasonable
execution analysis. Still, the Government argues that the
warrant established probable cause, that the agents timely
executed the warrant, and the agents searched only within the
scope of the warrant.
Fourth Amendment contains no provision expressly precluding
the use of evidence obtained in violation of its
commands.” United States v. Leon, 468 U.S.
897, 906 (1984). The exclusionary rule is “a judicially
created remedy designed to safeguard Fourth Amendment rights
generally through its deterrent effect.” United
States v. Calandra, 414 U.S. 338, 348 (1974). Under the
exclusionary rule, “illegally seized evidence”
cannot be used “against the search victim in a criminal
trial.” Id. at 350.
is a “good faith” exception to the exclusionary
rule “when an officer acting with objective good faith
has obtained a search warrant from a judge or magistrate and
acted within its scope.” Leon, 468 U.S. at
920. “In the ordinary case, an officer cannot be
expected to question the magistrate's probable-cause
determination or his judgment that the form of the warrant is
technically sufficient.” Id. at 921.
“it frequently will be difficult to determine whether
the officers acted reasonably without resolving the Fourth
Amendment issue, ” a reviewing court may determine
first whether there was probable cause and then whether the
officer acted in good faith. Id. at 925.
deference is accorded to a magistrate's determination of
probable cause. Id. at 914; Spinelli v. United
States, 393 U.S. 410, 419 (1969). However,
“reviewing courts will not defer to a warrant based on
an affidavit that does not ‘provide the magistrate with
a substantial basis for determining the existence of probable
cause.'” Leon, 468 U.S. at 915 (quoting
Illinois v. Gates, 462 U.S. 213, 239 (1983)).
Probable cause for a search warrant exists where “there
is a fair probability that contraband or evidence of a crime
will be found in a particular place.” Gates,
462 U.S. at 238.
officers violate the terms of a warrant in execution, partial
suppression is the norm unless the officers engaged in a
general search.” United States v. Sears, 411
F.3d 1124, 1131 (9th Cir. 2005). “Wholesale suppression
is an ‘extraordinary remedy' that is appropriate
‘only when the officers transform the search into an
impermissible general search by ignoring the terms of the
warrant and engaging in indiscriminate fishing.'”
Id. (quoting United States v. Chen, 979
F.2d 714, 717 (9th Cir. 1992)).
arguments fall into two general categories: (1) there was no
probable cause for the search warrant (or for specific
actions taken in light of the search warrant), and (2) the
execution of the search warrant was unreasonable. The
Government responds to those arguments after first
challenging Hansen's standing. Because standing is a
preliminary matter, the Court will address it first.
in this context is different and distinct from Article III
standing. The Ninth Circuit has explained:
The term “standing” is often used to describe an
inquiry into who may assert a particular fourth amendment
claim. Fourth amendment standing is quite different, however,
from “case or controversy” determinations of
article III standing. Rather, it is a matter of substantive
fourth amendment law; to say that a party lacks fourth
amendment standing is to say that his reasonable
expectation of privacy has not been infringed. It is with
this understanding that we use “standing” as a
United States v. Taketa, 923 F.2d 665, 669-70 (9th
Cir. 1991) (emphasis in original) (internal citations
Government argues that Hansen does not have standing to
challenge the search of Yellowstone's offices, the
desktop computers, or Yellowstone's server, but concedes
that he has standing over the search of his personal
cellphone. The Court will briefly address each argument
raised by the Government in support of its motion.
Can Hansen present standing evidence in his Reply brief?
Government begins by arguing that Hansen did not establish
standing in his original Motion to Suppress and as a result,
his motion must be denied. In the Government's
estimation, while Hansen claims he owned Yellowstone, he
alleged no facts establishing a reasonable expectation of
privacy. Hansen responded to these arguments in his reply
brief, however, the Government asserts this tactic is
improper because such would constitute new argument and
evidence, and it did not have a fair opportunity to respond.
The Court disagrees.
assertions are not “new arguments” because those
arguments substantively respond to the Government's
Response brief. See United States v. Bohn, 956 F.2d
208, 209 (9th Cir. 1992) (accepting argument raised in reply
because it was responsive to opposition brief); Zkey
Invs., LLC v. Facebook Inc., 225 F.Supp.3d 1147, 1158
(C.D. Cal. 2016) (declining to strike argument and evidence
offered in reply because it was in direct reply to the
opposition); Hodges v. Hertz Corp., 351 F.Supp.3d
1227, 1249 (N.D. Cal. 2018) (“[T]he court has the
discretion to consider new evidence presented on reply,
particularly if the new evidence appears to be a reasonable
response to the opposition.”). Here, the only
place Hansen could put this evidence in is his reply brief as
he would not have been aware of it until the Government filed
its Response to his motion. The Court finds that Hansen's
arguments were timely and appropriate.
Can Hansen present additional standing evidence in a second
filed a Notice (Dkt. 60) on July 7, 2019-more than two weeks
after his Reply brief-which included further argument and
evidence in support of his argument that he has standing to
challenge the Government's search of Yellowstone and
specifically certain offices and employees. Essentially this
Notice is a motion to supplement.
issue here are two versions of Troy High's affidavit. The
Government in its Response brief to the original motion
included only the second affidavit (created May 29, 2019),
and Hansen claims he learned of an earlier affidavit (create
May 28, 2019) on July 2, 2019, “as part of the 3,
286-page, sixteenth discovery production.” Dkt. 60, at
28 Affidavit includes two paragraphs omitted from the May 29
Affidavit. In all other respects, they are identical. Those
paragraphs detail how Hansen asked Troy High for
employees' computer passwords and downloaded software to
access employees' computers. Hansen argues that this
behavior demonstrates managerial responsibility and control
and illustrates that Hansen's own computer was more
private and secure than other computers at Yellowstone.
Government explains that it asked Troy High “to excise
those statements” because they “were superfluous
to the suppression motion.” Dkt. 63, at 4.
discussion on this point is unnecessary as Troy High
testified at the suppression hearing and explained these
comments in greater detail. To that end, the Court will give
High's affidavit(s) and testimony the weight it deems
appropriate. Accordingly, the Motion (Dkt. 60) to supplement
is deemed MOOT.
Does Hansen have standing over the search of his office and
has long been settled that one has standing to object to a
search of his office, as well as of his home.”
Mancusi v. DeForte, 392 U.S. 364, 369 (1968). In
Mancusi, the United States Supreme Court held that
an employee could “expect that he would not be
disturbed by personal or business invitees, and that records
would not be taken except with his permission or that of his
. . . superiors.” Id. The Supreme Court also
explained “that the situation was not fundamentally
changed” when the office was shared. Id.
Government attempts to argue that since Hansen did not lock
his office and since his assistant had access to his office,
he does not have standing over the search of his office. This
argument fails to adequately exclude this case from the
holding in Mancusi.
the Government argues Hansen did not have exclusive use of
his computer because Troy High, Yellowstone's Systems
Manager, had administrative access to all Yellowstone
computers and because Yellowstone's policy manual stated
that “[e]lectronic communications are not private and
may be monitored, reviewed and recorded by the Company”
and that “[t]he Company's electronic communications
are to be used for business purposes only.” Dtk. 41-4,
argument is also unpersuasive. The computer was in
Hansen's office. As such, Mancusi applies to
both the office and the computer. Furthermore, courts have
repeatedly found that a person has standing over the search
of his or her own office computer. See,
e.g., United States v. Ziegler, 474 F.3d
1184, 1190 (9th Cir. 2007) (finding employees have “a
reasonable expectation of privacy in his office, [and] any
search of that space and the items located therein must
comply with the Fourth Amendment”); Leventhal v.
Knapek, 266 F.3d 64, 73-74 (2d Cir. 2001) (finding the
employee “had a reasonable expectation of privacy in
the contents of his office computer” because the
computer was not shared, and was in “a private office
with a door.” It did not matter that “technical
support staff had access to all computers” and that
there was an office policy prohibiting use for personal
business); United States v. Long, 64 M.J. 57, 64
(C.A.A.F. 2006) (finding-among other things-that because the
computer was password protected, the computer user had
standing over the search of that computer).
the Court finds that Hansen has standing to challenge the
search of his office and to ...