Use of Wiretaps and Administrative Subpoenas in White-Collar Cases Expanding

The Fourth Amendment, with its protections against unreasonable search and seizure, is still the law of the land. However, recent expansions in the ability of the government to monitor electronic communications, phone calls, and financial records without a warrant or notice to the affected party(ies) raise many questions.

To be sure, there are limited exceptions to the search and seizure rules. In cases of potential terrorism covered by statutes such as the USA Patriot Act, normal requirements that law enforcement officials have probable cause and get a warrant from a judicial official before searching do not necessarily apply. We are all familiar with the new developments in "airport screening."

But the new government tools are far more broad-ranging than that. These new tactics include Administrative subpoenas, cell phone data and voice interception, GPS monitoring, and spy camera monitoring. Furthermore, these tactics have expanded beyond the investigation of terrorist threats and have become routine practice in almost all federal criminal prosecutions.

Most Americans would be surprised to learn that some federal agencies are authorized to issue subpoenas directly to businesses and persons without any judicial oversight. For example, the DEA ia authorized to compel the production of evidence to itself in the investigation of certain drug related criminal activity. Other records that are often subject to administrative subpoena are financial and banking records, email records, and phone records.

Federal wiretaps, while requiring nominal judicial oversight and once utilized only rarely in the complex and large conspiracy and racketeering cases, are now routinely granted in almost every type of federal criminal case investigation. Without any prior authorization from a judge, a GPS monitor can be placed on a person's car without their knowledge or consent during a government investigation. The same goes with secret spy cameras or pole cameras placed outside a person's home or business.

Suspected white-collar crime, however, is certainly distinguishable from threats of violence by terrorists or the activities of violent racketeers like the mafia. And yet, increasingly, the government is using these new extra-judicial tactics like wiretaps and administrative subpoenas to extract evidence from or against people suspected of financial crimes like insider trading, and even mortgage fraud.

Galleon Insider Trading Investigation

An infamous case in point was the recent arrest of former hedge fund trader Craig Drimal and his wife Arlene, a former federal prosecutor. At 3:45 in the morning, the FBI appeared outside their house with halogen lights and a bullhorn. The Drimals' 11-year-old son was also awakened as agents pounded on the door.

After they were arrested, the Drimals discovered that the FBI had been wiretapping their phone calls for months. Over 160 calls between the husband and wife may have been intercepted.

Many commentators have rightly questioned whether this is a legitimate use of wiretapping. Investigations of suspected financial crime such as fraud or insider trading are indeed important. But they are different from terrorism cases and battles against the mob. They do not justify running roughshod over civil liberties.

Administrative Subpoenas

The same argument holds against expanding the use of administrative subpoenas. These are subpoenas that do not go before the review of a judicial official but instead are issued directly by law enforcement agencies. These subpoenas are increasingly being used in white collar cases.

Administrative subpoenas are usually issued by the investigating agency to a third party holder of the records sought: For example banks, cell phone companies and internet service providers. Furthermore, the federal statutes authorizing these extra-judicial subpoenas often provide the third party no sufficient grounds to object to the subpoena and almost all directly prohibit the service provider or record holder from notifying their customer that their records are being seized by a federal agent.

Originally intended for use in only the most extreme cases - for example, terrorism, these aggressive and highly questionable investigatory tactics are employed far more routinely than ever intended. Compounding the problem are the barriers Congress saw fit, typically in the name of national security, to place on front of anyone seeking to challenge the use of these techniques in a court of law.

Federal criminal defense attorneys must keep abreast of the rapidly developing changes in the areas of electronic surveillance and extra-judicial records subpoenas in order to properly defend their clients.


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