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Case 1:05-cr-00345-KD-C

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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION UNITED STATES OF AMERICA, vs. STEPHEN EUGENE RUSSO, Defendant. * * * * * * *

CRIMINAL NO.: 05-00345-KD-C

COMBINED MOTION TO SUPPRESS EVIDENCE AND FOR RETURN OF ILLEGALLY SEIZED PROPERTY Defendant in this cause, Stephen E. Russo, by his counsel Richard D. Horne, moves pursuant to Rule 12 (b) (3) (C), and Rule 41 (h) of the Federal Rules of Criminal Procedure for the suppression and exclusion as evidence in this cause of items seized by agents of the United States government from his home, storage facility and safety deposit box. These areas were searched and his property seized on the basis of two separate search warrants issued by a judicial officer of the United States District Court for the Southern District of Alabama. As stated below, the search and seizure of Mr. Russo's private property was in violation of his right to be free from unreasonable searches and seizures guaranteed by the Fourth Amendment to the Constitution of the United States. As a person aggrieved by an unlawful search and seizure, Mr. Russo also moves, pursuant to Rule 41 (g) of the Federal Rules of Criminal Procedure, for the return of his personal property (as specified in paragraph 12 below). Because the searches and seizures specified herein involved the intrusion of areas in which

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Mr. Russo had a reasonable expectation of privacy from governmental intrusion (to wit: his home, his private storage facility, and his bank safety deposit box) he has the requisite "standing" to seek suppression and return of the evidence that is the subject his Motion. The grounds for this Motion are as follows: ISSUANCE AND EXECUTION OF SEARCH WARRANTS 1. On January 19, 2006, at 6:30 a.m., FBI Special Agent Adam Scholtz, submitted a form titled Application and Affidavit for Search Warrant to United States Magistrate Judge William E. Cassady, in the United States District Court for the Southern District of Alabama. This application sought judicial authorization to search Mr. Russo's residence at 28103 Perdido Beach Boulevard, Unit # D-210, and Unit # 1 of a warehouse facility located at 4399 Lindsey Ave., Orange Beach, Alabama (more fully described in Attachment B appended to the application). An affidavit signed by Agent Scholtz purporting to demonstrate probable cause to believe evidence of criminal activity was located in the described areas accompanied the application along with Attachment A which purported to describe the property to be seized. This application including the affidavit, and Attachments A and B, are appended to this Motion as Exhibit 1. 2. On January 19, 2006, at 6:30 a.m., Magistrate Judge Cassady issued a warrant to search the properties described in the preceding paragraph. Appended and incorporated into the warrant were the aforesaid Attachments A and B. The search warrant is appended to this Motion as Exhibit 2. There is no reference on the face of the warrant either to the incorporation of the Scholtz affidavit into the body of the warrant or of its attachment to the warrant. 3. The searches authorized by the warrant were conducted the same day and a large

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number of items were seized and taken from Mr. Russo's home and storage facility by government agents. These items are listed in a three page inventory appended to this Motion as Exhibit 3. 4. During the course of the search of Mr. Russo's residence the agents discovered what are described in the aforesaid inventory as Items G-3 and G-5 "Safety Deposit Box Key(s)." 5. Notwithstanding that "safety deposit box" keys were not included in the broad categories of items to be seized listed in Attachment A to the search warrant, and that their relevance to the alleged offenses was not immediately apparent to the agents conducting the search, these keys were seized and later were submitted to Magistrate Judge Cassady in support of an application for a separate warrant to search a bank safety deposit box rented by Mr. Russo. 6. Later on January 19, 2006, Special Agent Scholtz submitted a second application for a warrant to search a safety deposit box described as follows: "Colonial Bank safe deposit box # 129, leased by Stephen Eugene Russo located at 2523 Perdido Beach Blvd. Orange Beach, Al." The probable cause affidavit and its Attachment A submitted in support of this application are identical to that described in preceding paragraph 1 except for the following language added to the affidavit: There is probable cause to believe that the documentation described in Attachment A, which includes documentation related to RUSSO'S private business interests, personal and campaign finances, and personal and official travel are currently located in RUSSO'S safe deposit box held at Colonial Bank, as described above. Pursuant to a search warrant issued by this Court earlier today, January 19, 2006, your Affiant has located a key to the Colonial Bank safe deposit box held at Colonial Bank, as described above, found in the office of RUSSO'S condominium located at Caribe The Resort, Unit # D-210, in addition to a large amount of cash. I have ascertained the presence of this box at said bank. In my experience in law enforcement, documents and other effects related to the matters contained in Attachment A routinely are maintained in safe deposit boxes at banks.

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A copy of the application, affidavit and Attachment A is appended to this Motion as Exhibit 4. 7. At 4:50 p.m. on January 19, 2006, Magistrate Judge Cassady issued a search warrant for the safety deposit box described in the preceding paragraph. Agent Scholtz conducted a search of the aforesaid safe deposit box on January 20, 2006, and seized all the items that it contained. A copy of the warrant and a document titled "Evidence Recovery Log" are appended to this Motion as Exhibit 5. CONSTITUTIONAL BASES FOR EXCLUSION OF EVIDENCE Search of Residence and Storage Facility 8. The warrant for the searches and seizures of property from Mr. Russo's residence and storage facility violated his rights guaranteed by the Fourth Amendment to the Constitution of the United States for the following specific reasons: (a) The affidavit submitted by Special Agent Schotlz in support of his application for a search warrant fails completely to establish probable cause to believe any items subject to seizure as evidence of criminal activity were located in or on the described premises. The affidavit consists merely of a series of bare allegations and conclusions drawn by a partisan government investigator with no showing of the factual bases for his allegations and conclusions. The judicial officer had no reliable way of determining whether the allegations of Agent Scholtz were based on his personal knowledge, hearsay sources, public records, independent evidence, or idle rumor. (b) The affiant's claim of expertise with respect to the "routine" record keeping practices of some undefined and unidentified class of suspects to which Mr. Russo allegedly belonged is without foundation and lacks empirical support. In this regard it should be noted that Scholtz at the time of his application was an agent of less than two years law enforcement experience and had, given the time required for basic training, been a field investigator for a much shorter period of time. (c) Warrant Attachment A, which is incorporated into the affidavit and the search warrant, lacks the specificity and particularity necessary to limit the discretion of the agents conducting a search in determining what items of property may be seized. The language of the Attachment appears to be a "boilerplate" listing of categories of private documents

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and papers without any limitation premised upon their connection to the alleged offenses under investigation (i.e., "nexus"), or of dates relevant to the investigation. (d) Insofar as the warrant authorizes the wholesale seizure of computers and computerrelated disks and equipment, there is (1) no allegation in the affidavit to support a finding of probable cause that Mr. Russo's residence contained computers and related data storage devices and (2) no showing of probable cause to believe that any computer or data storage devices that may have been located on the property contained any relevant evidence of criminal activity. (e) The wholesale and indiscriminate seizure of private books, papers, documents, records, computer hardware and software located in Mr. Russo's residence and storage facility without separate determination of the nexus between the items seized and the alleged offenses under investigation demonstrates that neither the warrant nor the execution of the warrant by the government agents complied with the limitations imposed by the Fourth Amendment to the Constitution of the United States. (f) The record in this cause shows that an indictment charging Mr. Russo with various federal offense was returned and sealed on December 28, 2005. The government theretofore made no secret that Mr. Russo and others were the targets of a grand jury investigation that lasted several months. The Scholtz affidavit refers to activities alleged to have occurred between August 2004 and August 2005. At some point it is alleged that Mr. Russo changed residences in Orange Beach, AL. There is nothing in the affidavit to support an inference that evidence of the alleged criminal activity would have been retained by Mr. Russo over this period of time. Hence the information, even in its conclusory form, concerning the existence and location of evidence of criminal activity is too stale to support the warrants issued on January 19, 2006. (g) In paragraph 14 of his affidavit Agent Scholtz alleges that he learned from the driver of a moving company truck that certain items, including "boxes of documents and a safe," were removed from Mr. Russo's residence and delivered to his storage facility. Agent Scholtz stated further: "On January 18, 2005 (sic) your Affiant confirmed the (sic) that items generally fitting the description of what was described by the driver were located in the storage facility." There is no indication how this alleged confirmation was accomplished, but the language employed supports an inference that this information may have been acquired as a result of a warrantless "sneak and peak" search of Mr. Russo's storage facility by Agent Scholtz. If this is the case, then the information was obtained in consequence of a violation of Mr. Russo's rights under the Fourth Amendment, and compels the exclusion of any evidence subsequently seized from that facility premised upon a search warrant tainted by such unlawfully acquired information. (h) In its entirety the affidavit of Agent Scholtz fails to establish probable cause to believe that the evidence sought to be discovered and seized from Mr. Russo's private residence

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and storage facility would be relevant to the prosecution of any of the alleged violations of federal criminal statutes listed in the application for a search warrant. Because of these enumerated violations of the constitutionally dictated process for the issuance and execution of search warrants, the search of Mr. Russo's home and storage facility was the kind of general and unconstrained search that the Framers of the Fourth Amendment had uppermost in theirs minds at the time the Amendment was included in the Bill of Rights. 9. The federal agents in this cause exceeded even the broad scope of the search warrant addressed in the preceding paragraph because they seized items that either were not included within any of the broad categories of items listed in Attachment A, or which bore no reasonable nexus to the alleged offenses under investigation. These items include, but are not limited to, the following listed in the inventory of items removed from Mr. Russo's residence: (a) G-2 Box container (sic) multiple items [no indication as to nature of items] (b) G-3 Safety deposit box key (c) G-4 Possible [emphasis supplied] marijuana pipe/container (d) G-5 Safety deposit box key (e) G-6 $1,000 cash (f) G-7 U.S. Passport ­ Steve Russo (g) G-8 Receipt for Rolex (h) Brochure to spa (?) (i) H-1 $4880.00 found in briefcase (j) 3 Rubenstein suits Because these seizures were not authorized even under the broad terms of the search warrant, they must be treated as warrantless seizures and, therefore, presumptively unreasonable unless the government can show it is entitled to claim some exception to the warrant clause of the Fourth Amendment. Moreover, because of the failure of government agents to disclose to Mr. Russo and his counsel the specific identity of the documentary evidence seized from his property,

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or to disclose the content of any files the government may have recovered from his computer and computer disks, Mr. Russo and his counsel are unable to determine (1) whether any such material is relevant to the instant case, or (2) the extent to which his private papers, records, correspondence, diaries or other forms of private communications have been invaded by the government's general search. 10. The inventory of property taken from Mr. Russo's storage facility lists three items removed from a [supposedly locked] gun safe, to wit: (1) Pelicon (?) Box w 35 Floppy Discs (2) Plastic Bag w/ Documents (5) $500.00 Cash (25 x $20 Bills) And two other "items" listed as: (3) Plastic Tub w/ Real Estate Documents (4) Brown Box w/ Newspapers + Documents This listing supports an inference of a "clean sweep" of the contents of the storage facility with no attempt to ascertain any nexus between these items and the alleged offenses under investigation. Since it is impossible to tell from the inventory the nature and identity of the contents of the containers that were seized, the burden is on the government to show that such items were within the scope of the warrant or were otherwise subject to seizure without a warrant. Search of Safe Deposit Box 11. The warrant for the search and seizure of items contained in Mr. Russo's safety deposit box was in violation of his rights guaranteed by the Fourth Amendment to the

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Constitution of the United States for the following specific reasons: (a) For all of the reasons stated in the preceding paragraph 8 (a)-(h) there was no probable cause for the seizure of the safe deposit box keys from Mr. Russo's residence. (b) In any event, the keys did not fall within the broad description of items listed in Attachment A and, therefore, were outside the scope of any seizure permitted pursuant to the warrant. (c) Since the keys were obtained by the government as a result of an unconstitutional seizure they constitute unlawfully obtained derivative evidence (fruit of the poisoned tree) and cannot be employed as evidence to support the issuance of a second warrant for the search of the safe deposit box. (d) The discovery of the keys even if lawful did not support a finding of probable cause to believe the safe deposit box contained any evidence bearing a nexus to the alleged offenses under investigation. The only support for opening the safe deposit box is the claim of expertise by the FBI agent and that claim is entitled to no weight for the reasons stated in the preceding paragraph 8 (b). (e) The seizure of all items found in the safe deposit box without determination of their nexus to the alleged offenses under investigation was, independently of the matters stated above, a general seizure of property without proper judicial authorization. Support for Return of Lawfully Possessed Private Property 12. For the reasons stated in the preceding paragraphs 1-11, all of the property listed in the inventory of items (except for Item G-4), that were removed from his residence, storage facility and bank safe deposit box should be returned to his lawful custody. The one item, "G-4 Possible marijuana pipe/container", he does not ask to be returned is due not to any admission that the item may fit within a category of contraband, but because such item is not at issue as evidence in these federal proceedings and is being addressed in separate state court proceedings in which Mr. Russo has been charged with possession of drug paraphernalia.

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Request for Evidentiary Hearing 13. Because the inventory of the items seized as a consequence of the searches described in the preceding paragraphs of this Motion reveals that the government's seizure of Mr. Russo's property exceeded even the broad scope of the search permitted by the warrant, such seizures are tantamount to warrantless seizures and Mr. Russo is entitled to an evidentiary hearing during which the government will have the burden to prove that such items were not seized unlawfully. Further, the affidavit of Agent Scholtz (1) contains in paragraph 6 false or misleading information regarding the classification of Orange Beach as a municipality under Alabama law and the role of the mayor in voting on ordinances regarding real estate development projects; (2) contains in paragraph 12 false or misleading information with respect to the purchase and resale of certain real property by Mr. Russo; and (3) contains in paragraph 15 false or misleading claims with respect to Scholtz's training and experience to support his (otherwise unsupported) opinion that evidence of the alleged violations of state and federal statutes would be located in Mr. Russo's residence, storage facility and bank safe deposit box. These defects in the affidavit are relevant to rebut any claim of "good faith" reliance upon a defective warrant that may be asserted by the government in this cause. Further, when fully developed in an evidentiary hearing, this information will support a showing that the affiant intentionally, knowingly or recklessly misled the Magistrate Judge concerning the material facts alleged to amount to probable cause for the issuance of the search warrants in this cause so as to require suppression of all of the challenged evidence pursuant to Franks v. Delaware, 438 U.S. 154 (1978).

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CONCLUSION For the reasons stated in this Motion the items of property seized from Mr. Russo's residence, storage facility and bank safe deposit box should be suppressed as evidence in the pending criminal proceedings. For the same reasons these items, with the exception of "G-4 Possible marijuana pipe", should be returned to Mr. Russo in accordance with Rule 41 (g) of the Federal Rules of Criminal Procedure. In the alternative, the Defendant requests an evidentiary hearing with respect to the matters stated in the preceding paragraph 13.

Respectfully submitted,

/s/ Richard D. Horne Richard D. Horne (ASB 2277-067-R) Richard D. Horne, L.L.C. 1 S. Royal Street, 4th Floor (36602) P.O. Box 916 Mobile, AL 36601 Telephone: (251) 432-4421 Facsimile: (251) 432-4426

CERTIFICATE OF SERVICE

I hereby certify that I have on this 6th day of March, 2006, served a copy of the foregoing by Fax and via ECF and on the following parties: Steve Butler, Esq. Untied States Attorney's Office 63 N. Royal Street, Ste. 600 Mobile, AL 36601 (251) 441-5845 Office (251) 441-5277 Fax [email protected] /s/ Richard D. Horne

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