Oklahoma Criminal Defense Blog

Raj Rajaratnam is charged in U.S. District Court for the Eastern District of New York with insider trading on the stock market.  A billionaire hedge fund manager, he is facing evidence of 2,400 telephone recordings of his own voice.  The government placed a tap on his telephone in 2008.

Not surprisingly, Rajaratnam’s lawyers are attacking this evidence.  A federal statute, United States Code, Title 18, Section 2516 identifies a list of crimes for which the government is authorized to record telephone conversations.  Securities fraud is not listed, but money laundering and mail fraud are listed, and these crimes are commonly charged along with securities fraud.

The government had to file an application for a judge to issue an order allowing the wire tap.  In that application, the government recited it needed the wire tap order because it was investigating violations of wire fraud and money laundering.  But the charges filed did not include those charges, so Rajaratnam’s attorneys  are attacking the application as disengenuous, as intended to find only evidence of securities fraud, which is not a valid basis for a wiretap order.  But the U.S. Attorney did specifically give notice it was seeking the wiretap for insider trading as the principal crime it was investigating.  If the defendant’s lawyers can prove the wiretap order would not have been granted if the whole truth were not told, the order could be invalidated and the recorded conversations suppressed.

It is true that the Wiretap Act does not mention securities fraud, but it is not certain that Congress intended to exclude wiretaps from the investigation of securities fraud.  Inferring the omission of something in a legislative enactment to be an affirmative declaration calls for an interpretation.  It is a rule of statutory construction in latin and therefore incontestible:  “Expressio unius est exclusio alterius,” which in English can be translated, “The expression of one thing implies the exclusion of what is not expressed.”
Ck spelling of latin phrase

Another avenue of attack on the application is focusing on the cooperating witness quoted in the application.  The F.B.I. agent’s affidavit quotes a woman named Roomy Khan extensively.  Rajaratnam’s lawyers claim the affidavit does not give a clear picture of her criminal past, the character of her conversations with the defendant, or the changing versions of her recitals.

The application described Ms. Khan as not having been charged with any other crime and had been cooperating with the government since 2007.   But the defendant’s lawyers claim she was charged with wire fraud in 2001 and agreed to cooperate with the government at that time.  Of course, the government will reply they were referring only to the present investigation.

The defendant also attacks what the wiretap application’s affidavit describes as Rajaratnam’s statements to Ms. Khan as conveying insider information, when if fact the information was based on publicly available information.

The final avenue of attack on the government’s affidavit is the constancy of Ms. Khan’s statements.  These are presented in the government’s affidavit as being straightforward.  But the defendant’s lawyers received, as they routinely do in discovery, copies of the F.B.I. interviews, known as 302’s.  These interviews viewed over time show changing stories from Mr. Khan, and government investigators were aware of this when they presented the affidavit for the wiretap to the judge.  But the affidavit softens the changing versions.  It omits any reference to her obstruction of the investigation although, by her initial concealing of facts, this is arguably what she did.  Instead, the affidavit describes her as having been proven to be reliable.

Wiretaps are granted only after other investigative methods have been tried unsuccessfully or would be unsuccessful if tried.  The affidavit does not detail other investigative methods but states that other investigative attempts have failed.  In fact, Rajaratnam and his hedge fund, Galleon Group, were responding to a series of discovery demands, subpoenas and inquiries, and Rajaratnam’s lawyers claim they were cooperating with the government.  Obviously, the government did not agree, else the government would not have sought the wiretap.  The government was on the trail of unusual transactions, and it wasn’t getting the explanations with the methods they had tried.

William Jefferson, former Congressman from New Orleans, was sentenced to 13 years in federal prison for using his office to enrich himself and his family.  His sentence was less than the 27 years recommended by the U.S. Attorney.  He was convicted by a jury last August for bribery, racketeering and money laundering.  Some of his schemes involved business ventures in Africa.

Since Jefferson is 62 years old, his sentence could be a life sentence, since there is no parole in the federal prison system, although he could get 15 per cent of his sentence off for good behavior.

Jefferson was convicted after a six-week trial in Alexandria, Virginia. He was found guilty of 11 of 16 counts after he was indicted in June, 2007.  But his indictment followed highly publicized activity in the case.  Jefferson was videotaped by the FBI in July, 2005, receiving $100,000 of $100 bills in a briefcase in Arlington, Virginia.  Captured by a wire on one of the participants, Jefferson allegedly advised an informant to give Nigerian Vice President Atiku Abubakar $500,000 to make sure their business interests obtained contracts for their companies in Nigeria.

A few days later the FBI raided Jefferson’s home in Washington, D.C. and claimed to have found $90,000 of the cash in the freezer in $10,000 increments, wrapped in aluminum foil and stuffed inside frozen-food containers.”  The FBI claimed the serial numbers found on the bills in Jefferson’s home matched serial numbers of the money the FBI had given to their informant.

It was nine months later that the really big raid took place.  FBI agents executed a search warrant on Jefferson’s office in the House of Representatives, the Rayburn House Office Building.  Jefferson was a sitting Congressman at the time, and the FBI raid is believed to be the first time a raid was ever conducted on the office of member of Congress.

The separation of powers implications raised great concerns.  Members of Congress feared the precedent of law enforcement officers raiding legislators’ offices.   If legislators’ offices could be raided whenever agents of the executive branch claimed they were on the trail of criminal evidence, the legislative branch of government could be at the mercy of the executive branch.  These are the kinds of raids Russia’s Premier Putin has conducted to crush the formerly free press and private businessmen who challenged Putin.  These are the kinds of raids governments around the world have used as a pretext to force legislators to follow the command of the executive.

Congressional leaders immediately demanded the FBI return documents seized from the raid of Congressman Jefferson’s House office.  House Speaker Dennis Hastert and Minority Leader Nancy Pelosi spoke out together.  Reportedly Attorney General Alberto Gonzales and FBI Director Robert Mueller threatened to quit if the Justice Department had to return the documents.  Meanwhile, the House of Representatives was threatening to axe the Justice Department’s budget.  President Bush ultimately directed the Justice Department to seal all seized evidence for 45 days.

At the time, an ABC News poll in June, 2006 found 86% in the United States supported the FBI’s right to search congressional offices when they obtain a warrant.  This should be no surprise. The public’s support of law enforcement always outweighs support of Constitutional restraints.  At least the poll dealt with a search warrant.

As any criminal defense lawyer will tell you, members of the general public for the most part always will see the justification of unconstitutional actions in the results.  If the police acted without probable cause or a trumped up justification, the public does not often question the action.  There are significant exceptions, but for the most part, the safeguards of the Constitution are not appreciated by the general public when weighed against the value of “getting bad guys.”.

The public wants crimes solved, and the restraints on government placed by the Constitution are seen as speed bumps to be ignored only “a case at a time.”  The “case at a time,” of course, becomes the rule rather than the exception because in every case there is a “good reason” to go ahead with ignoring the restraints, to go ahead and get this guy because “this guy really needs getting” or “this crime really needs solving.”  The Constitution remains on the sidelines from little use until that member of the public or this person has an experience when they are surprised at how easy the rules have made it to convict someone innocent of a crime.

William Jefferson challenged the raid on his office to the District Court of the District of Columbia.  The Court held that the broad protections of the Speech or Debate Clause, which give absolute immunity from prosecution for legislative acts does not shield members of Congress from the execution of valid search warrants.  For those who fear executive overreach, it is noteworthy that search warrants would necessarily require approval from the judicial branch of government.  Oddly, Chief Hogan, who made this finding was the one who had approved the original search.

The decision of the District Court was appealed to a three-judge panel held that Department of Justice could not review Jefferson’s filed until Jefferson had seen what files had been taken from his office and which pertained to his legislative duties.

Thereafter the House of Representatives stripped Jefferson of his committee assignment in the House.  Jefferson was reelected in 2006, but after being indicted in 2007, he lost election in 2008, upset by a Republican in an overwhelmingly Democratic district.  Jefferson went to trial as an ex-Congressman.