Petition for Writ of Certiorari — Chuang v. United States

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Fs a) Supreme Court, US.

9=203] A) RTL ED

No. . JUM 27 1990

ENEEEE SEAL OL, UR.

C! ERY

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989 a

KUANG HSUNG J. CHUANG,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

ROBERT S. LITT

WILLIAMS & CONNOLLY

839 Seventeenth Street, N.W.

Washington, D.C. 20006

(202) 331-5000

Counsel of Record for Petitioner

| Kuang Hsung J. Chuang

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

o /

QUESTIONS PRESENTED

Petitioner’s conviction was based largely upon evidence

obtained, directly or indirectly, from two warrantless

searches. The first was a week-long examination of the

records of Golden Pacific National Bank (“Golden Pa-

cific’), which petitioner controlled, by agents of the Of-

fice of the Comptroller of the Currency (“OCC”). The

second was a search of petitioner’s law office by agents

of the Federal Deposit Insurance Corporation (“FDIC’’),

which had been appointed receiver of Golden Pacific after

the OCC closed the bank. Petitioner moved tu suppress

evidence derived from both searches. The District Court

denied both motions and admitted the evidence; the Court

of Appeals affirmed.

The questions presented are:

(1) Whether the president and majority stockholder

of a bank, who dominated its activities and demonstrated

a desire to keep certain bank records private, has stand-

ing to challenge a search of those records.

(2) Whether 12 U.S.C. § 481, which authorizes war-

rantless searches of national banks by agents of the OCC

without any limitations on time, scope or manner of exe-

cution, is constitutional.

(3) Whether government agents with statutory au-

thority for the warrantless search of a business can

search other premises without probable cause to believe

that the business is being conducted from the premises

searched.

(i)

PARTIES TO THE PROCEEDING

The parties to the proceeding below are identified in

the caption.

TABLE OF CONTENTS

Page

pe ES Se 5 g ) cn iv

ick mms cbdguuisesinbicnaebibibies 1

I ss cenncccsnasvnesavenennessccucnnssisnersces Peer enRes 2

CONSTITUTIONAL AND STATUTORY PROVI-

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URI IT EIS GC AMRUIID concn cccnncnnsncncececnsoscccesesccans 3

EE oe ee 3

ee ee UIP RIIN ARN ncn ccnnececcncneccncncennnns 4

C. The Searches ......... Gaenkain AL EASA EYL SLE TSI 6

Ne oc. sesnasnopameunscebennasnes 8

ga 8

_ 10

REASONS FOR GRANTING THE WRIT ............... Poe 12

I. PETITIONER’S STANDING TO CHALLENGE

en oi eneisaambonetonnne 12

Il. THE CONSTITUTIONALITY OF 12 U.S.C.

Neen ne eee acl sea cemlenahiben 17

Ill. THE SEARCH OF PETITIONER’S LAW

EL pr i a 22

IS ao lhe a 24

(iii)

TABLE OF AUTHORITIES

CASES Page

Arizona v. Hicks, 480 U.S. 321 (1987) ..................... 23, 24

Camara v. Municipal Court, 387 U.S. 523 (1967) .... 18

Donovan v. Dewey, 452 U.S. 594 (1981) -....000..... 18

Florida v. Wells, 110 S.Ct. 1632 (1990) -......0.00.00. 21

Horton v. California, 58 U.S.L.W. 4694 (U.S. June

es I Since enaricbaicceeennne ciara needa ee cea. 21

Illinois v. Krull, 480 U.S. 340 (1987) .........2220200002... 11

Katz v. United States, 389 U.S. 347 (1967) ............. 21

Mancusi v. DeForte, 392 U.S. 364 (1968) ............... 12

Marshall v. Barlow’s, Inc., 486 U.S. 307 (1978) ..18, 19, 20

Maryland v. Buie, 110 S.Ct. 1093 (1990) ........ ate 24

Maryland v. Garrison, 480 U.S. 79 (1987) ............... 22

Mincey v. Arizona, 437 U.S. 385 (1978) —...0000.0.... 21

Minnesota v. Olson, 110 S.Ct. 1684 (1990) ............. 15

New York v. Burger, 482 U.S. 691 (1987) -........ 7, passim

O’Connor v. Ortega, 480 U.S. 709 (1987) ................. 12, 14

See v. City of Seattle, 387 U.S. 541 (1967) -............ 18

Sibron v. New York, 392 U.S. 40 (1968) ........0........ 23

United States v. Biswell, 406 U.S. 311 (1972)........ 19

United States v. Brien, 617 F.2d 299 (1st Cir.),

cert. denied, 446 U.S. 919 (1980) .......0000 0. 10, 18, 16

United States v. Cerri, 753 F.2d 61 (7th Cir.),

cert. denied, 472 U.S. 1017 (1985) -......02..20222. 22

United States v. Chuang, 696 F. Supp. 910 (S.D.

N.Y. 1988), aff’d, 897 F.2d 646 (2d Cir. 1990)... 1

United States v. Chuang, 897 F.2d 646 (2d Cir.

SID xccushtécrctipasicicouncsedetiveidbninskeeedinnnimaniamaatta Rectciaats 1

United States v. Gordon, 655 F.2d 478 (2d Cir.

MII cist scaisin beans utseibondsvasiedacabstagencedeeasenesbealeaeiiaaleaihicahdaibadaate 8

United States v. Horowitz, 806 F.2d 1222 (4th

+ SS” ERENCE Renae ORNL SADA Ly on Poe Cea 16

United States v. Leary, 846 F.2d 592 (10th Cir.

ENTERS SSMS tLe BIN SON MRE Un 18, 14, 15

United States v. Lefkowitz, 464 F. Supp. 227 (C.D.

Cal. 1979), aff'd, 618 F.2d 1313 (9th Cir.), cert.

denied, 449 U.S. 824 (1980) .......00000.. cece 16

United States v. Lefkowitz, 618 F.2d 1313 (9th

Cir. 1980), cert. denied, 449 U.S. 824 (1980)...... 16

TABLE OF AUTHORITIES—Continued

Page

United States v. Moscatiello, 771 F.2d 589 (1st

Cir. 1985), vacated on other grounds sub nom.

Carter v. United States, 476 U.S. 1138, on re-

mand, 803 F.2d 20 (1st Cir. 1986), vacated on

other grounds sub nom. Murray v. United States,

Pgs Ye Ot ee ereeeunios ene 16

United States v. Ross, 456 U.S. 798 (1982) ............. 21

United States v. United States District Court, 407

neon el DRE AUER DAN 19

STATUTES AND REGULATIONS

SOC Brae 1D heiress 5

15 C.F.R. § 387.13(f) (1) (1987) (now 15 C.F.R.

Ee SDD asanntncinneniccnssshcanmnsiinnstaninnaieetnananaanian 14

17 C.F.R. § 32.7(e) ........... PN LONE Ss LM F<? 13

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BD Us Oe vice cesta smenstacenentaniessteesnababielunmialiniaia 13

Be aie, OE vnc cnntectnicr creer nisn neeeeennee 2, passim

12 U.S.C. § 1464(d) (1) (as amended by Financial

Institutions Reform, Recovery, and Enforcement

Act of 1989, P.L. 101-73, 103 Stat. 183, § 301)... 18

RE UE ae te Ree i cise issisnsnshnenocenecenielisaalanpens 18

ED UL BREA BROOD asc cvsncnescsctnsisivnncsiintciissisiniidaneccmmanieiains 7

Bee Sole Ef | pepmmmmnmuenresrrmninrnesnrr wranenr nacre erent 2

Financial Institutions Reform, Recovery, and En-

forcement Act of 1989, P.L. 101-73, 103 Stat.

MISCELLANEOUS

“Bush Promising Quicker Pursuit in Savings

Cases,” The New York Times (June 23, 1990)

OE Dh ivciccsoanctacnaehoceuemeaaaaceedenmbanadio ciebbsccnaticaeece 17

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No.

KUANG HSUNG J. CHUANG,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Kuang Hsung J. Chuang petitions for a writ of cer-

tiorari to review a judgment of the United States Court

of Appeals for the Second Circuit affirming his convic-

tion and the district court’s refusal to suppress evidence.

OPINIONS BELOW

The opinion of the Court of Appeals is reported at 897

F.2d 646 and is revrinted at la-13a. The opinion of the

United States District Court for the Southern District of

New York denying petitioner’s motion to suppress evi-

dence seized during the warrantless search of petitioner’s

law office by the Federal Deposit Insurance Corporation

(“FDIC”) is reported at 696 F. Supp. 910 and is re-

printed at 17a-27a. Oral rulings of the District Court

disposing of petitioner’s motion to suppress evidence

seized during the warrantless search of Golden Pacific

National Bank (“Golden Pacific”) by agents of the Of-

fice of the Comptroller of the Currency (“OCC”) are re-

printed at 28a-36a.

JURISDICTION

The opinion of the Court of Appeals affirming peti-

tioner’s conviction was entered on February 28, 1990. A

timely petition for rehearing was denied on March 29,

1990. 14a. The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND

STATUTORY PROVISIONS INVOLVED

12 U.S.C. § 481 provides in relevant part:

The Comptroller of the Currency, with the approval

of the Secretary of the Treasury, shall appoint

examiners who shall examine every national bank

as often as the Comptroller of the Currency shall

deem necessary. The examiner making the examina-

tion of any national bank shall have power to make a

thorough examination of all the affairs of the bank

and in doing so he shall have power to administer

oaths and to examine any of the officers and agents

thereof under oath and shall make a full and de-

tailed report of the condition of said bank to the

Comptroller of the Currency: Provided, That in

making the examination of any national bank the

examiners shall include such an examination of the

affairs of all its affiliates other than member banks

as shall be necessary to disclose fully the relations

between such bank and such affiliates and the effect

of such relations upon the affairs of such bank: and

in the event of the refusal to give any information

required in the course of the examination of any

such affiliate, or in the event of the refusal to per-

mit such examination, all the rights, privileges, and

franchises of the bank shall be subject to forfeiture

in accordance with sections 141, 222 to 225, 2&1 to

283, 285, 286, 50la and 502 of this title. The Comp-

troller of the Currency shall have power, and he is

authorized, to publish the report of his examination

of any national banking association-or affiliate which

shall not within one hundred and twenty days after

notification of the recommendations or suggestions

of the Comptroller, based on said examination, have

complied with the same to his satisfaction. Ninety

days’ notice prior to such publicity shall be given

to the bank or affiliate.

The Fourth Amendment to the Constitution provides:

The right of the people to be secure in their persons,

houses, papers and effects, against unreasonable

searches-and seizures, shall not be violated, and no

Warrants shall issue, but upon probable cause, sup-

ported by Oath or affirmation, and particularly de-

scribing the place to be searched, and the persons

or things to be searched.

STATEMENT OF THE CASE

A. Summary

Petitioner Kuang Hsung J. Chuang, a lawyer, was the

president and ‘controlling stockholder of Golden Pacific,

the first Chinese-owned bank in New York City’s China-

town. In June 1985, agents of the OCC conducted a

surprise warrantless raid on Golden Pacific. After ex-

amining records for a week, the OCC declared Golden

Pacific insolvent, closed it and designated the FDIC as

receiver. Beginning the next day, FDIC agents searched

1 Events subsequent to the closing demonstrated that Golden

Pacific was not insolvent at the time it was closed by the OCC. In

fact, the FDIC has recently issued a press release announcing that

all of the creditors of the bank have been paid in full as a result of

the liquidation of the bank, a result that stands in stark contrast

to current news reports about financially ruinous bank failures. The

liquidation actually resulted in a substantial surplus, even after

the entire building in which Golden Pacific was located,

including petitioner’s law offices, located on the third floor

of the building.

Evidence derived from both searches—the week-long

inspection by the OCC and the search of petitioner’s law

office by the FDIC—was admitted, over petitioner’s ob-

jection, by the United States District Court for the South-

ern District of New York at the criminal trial of peti-

tioner and another. The United States Court of Appeals

for the Second Circuit affirmed petitioner’s conviction,

holding that he lacked standing to challenge the OCC

search of Golden Pacific and that the search of his law

office was proper.

B. The Underlying Charges

Petitioner is an immigrant from Taiwan, with law

degrees obtained both in Taiwan and in the United States.

He founded Golden Pacific in 1977. Principally through

petitioner’s efforts, and because of the unique service it

provided to the Chinese-American community, Golden Pa-

cific was a remarkable success. By 1985, it had over

$150 million in assets, with eight branches in the United

States (in addition to its main office) and representative

offices in the Far East. The Government’s proof at trial

demonstrated that Chuang dominated every aspect of

Golden Pacific’s activity and attended to every detail of

its business; indeed as part of its proof the Government

introduced testimony that the bank’s board of directors

payment of over $13 million in expenses attributable solely to the

liquidation.

Petitioner sought to prove at trial that Golden Pacific was not

insolvent. The District Court refused to permit him to do so,

although the jury had been informed that the OCC had closed the

bank. While petitioner does not believe that the closing of the bank

was justified he does not challenge it in this proceeding.

was often ignorant of its affairs and relied entirely on

petitioner. Tr. 431-32, 491-95.?

The focus of the criminal charges against petitioner

was a particular form of investment offered by Golden

Pacific to its customers, known as a “non-negotiable cer-

tificate.” At the time Golden Pacific began to sell non-

negotiable certificates, federal law barred national banks

from offering higher than a specified rate of interest on

regular certificates of deposit. See 12 C.F.R. § 217.7

(1980). The non-negotiable certificate program per-

mitted customers to earn a higher rate of return than

permitted by this ceiling.

The key question at trial was whether the non-

negotiable certificates were “deposits” under banking

law. A deposit is money lent to a bank by a customer,

for the repayment of which the bank is liable. Deposits

are insured by the FDIC, and must be reported by the

bank as liabilities on periodic financial statements to the

OCC known as “call reports.” Petitioner and Golden Pa-

cific took the position, however, that the non-negotiable

certificates were not deposits but were custodial accounts,

i.e., funds given to a bank for investment by the bank

as agent for its customers. Since the business in which

the bank invests the funds, rather than the bank itself,

is liable for repayment of custodial account funds to the

customer, they need not be reported on call reports and

are not insured by the FDIC. Golden Pacific neither re-

ported the non-negotiable certificate balances on its call

reports nor paid the premiums for FDIC insurance of

the certificates.*

2“Tr refers to the transcript of the trial. “[{Date] Tr.” refers

to the transcript of pre-trial proceedings held on the indicated date.

3 Petitioner presented evidence that the OCC, the Federal Reserve

Board, and Golden Pacific’s outside counsel had approved the non-

negotiable certificate program. The government presented evidence,

which the jury apparently credited, that neither the lawyers nor

the government agencies had been accurately informed about the

operation of the program.

The government contended, and the jury found, that

the non-negotiable certificate funds were deposits rather

than custodial accounts. Petitioner was therefore found

guilty of conspiracy to defraud the United States and of

making false statements on call reports. Petitioner was

also convicted of making false statements about the non-

negotiable certificate program to OCC examiners; of mis-

applying bank funds in the use of the proceeds of the

non-negotiable certificates; of defrauding purchasers of

non-negotiable certificates by failing to disclose that the

certificates were not insured by the FDIC‘; and of con-

spiring to cover up campaign contributions illegally made

with bank funds.’

C. The Searches

In 1985, a former employee of Golden Pacific, whom

petitioner had accused of participating in a check-kiting

scheme, went to federal authorities and made allegations

about the non-negotiable certificate program. Represen-

tatives of the OCC then asked an Assistant United States

Attorney to apply for a warrant to search bank records;

the prosecutor declined to do so. 3/10/88 Tr. 231-32. The

OCC examiners then armed themselves with an admin-

istrative subpoena compelling the production of records

relating to the non-negotiable certificate account. Al-

though notice had been given to Golden Pacific prior to

all earlier OCC examinations, 3/10/88 Tr. 250, on Mon-

day, June 17, 1985, the examiners entered the bank

without warning, demanded to meet with petitioner, pro-

duced the subpoena, and called for production of records

relating to the non-negotiable certificates—records which,

according to the government, petitioner had previously

4It was undisputed at trial that prior to the OCC’s closure of

Golden Pacific, all holders of non-negotiable certificates were repaid

their funds in full and on time; as noted supra n.1, all certificate

holders were repaid in full when Golden Pacific was closed.

5 Petitioner was sentenced to concurrent five-year jail terms, and

to make restituticn in the amount of $200,000.

concealed from the examiners. Tr. 2300-01. Responding

to the examiners’ show of authority, petitioner directed

his chief assistant to produce the records. 3/10/88 Tr.

252-54. During that week, OCC examiners examined in

detail records relating to the non-negotiable certificates.

The information obtained from this examination—which

for Fourth Amendment purposes was a search, New

York v. Burger, 482 U.S. 691, 699 (1987)°—was the

foundation of the government’s proof against petitioner.

As a result of the information obtained during the

search, and of what the OCC considered to be unsatis-

factory answers to questions about the extent of the as-

sets corresponding to the non-negotiable certificates, the

OCC declared Golden Pacific insolvent on June 21, 1985.

and appointed the FDIC as receiver pursuant to 12

U.S.C. $1821(e).7. The FDIC then began a thorough

search of the entire building in which Golden Pacific had

its headquarters.

Located on the third floor of this building were the

offices of Chuang & Associates, a law firm of which peti-

tioner was the principal. The District Court found that

Chuang & Associates was an entity separate from Golden

Pacific. 18a-19a. On Saturday, June 22, an FDIC at-

torney entered the law firm offices through an interior

stairway connecting it to the bank; she testified that

she did not see a sign identifying the law firm, although

it was undisputed that such a sign existed. 19a. On

Monday morning, June 24, one of petitioner’s associates

in the law firm informed the FDIC that the law firm’s

offices were separate from the bank. Nonetheless, over

the course of the next week the FDIC thoroughly

6 The OCC admitted that one of its purposes was to gather evi-

dence for a possible criminal prosecution. 3/10/88 Tr. 260.

7 Petitioner asked the OCC for a few days’ time to demonstrate

that there were sufficient assets to meet Golden Pacific’s liabilities

but the OCC refused. In fact, as noted supra n.1, the bank’s assets

did exceed its liabilities.

searched petitioner’s law office and seized evidence that

was introduced against petitioner at trial.®

D. The Decisions Below

1. The District Court

Petitioner timely moved to suppress evidence obtained

during both the OCC search of Golden Pacific and the

FDIC search of his law firm. The District Court denied

the latter motion in a written opinion. 17a-27a. The

court held that the FDIC, as receiver, had “the power

and the duty to marshal the Bank’s assets and to wind

up its affairs.” 24a. Accordingly, the court held, relying

on United States v. Gordon, 655 F.2d 478 (2d Cir.

1981), that the FDIC had power to search the entire

bank without a warrant. The court further held that a

receiver has power to search a “law office [which] is

commingled with the business for which the receiver has

been appointed.” 24a. Since the court found that the

law firm was petitioner’s only office and that bank busi-

ness as well as law office business was conducted from the

offices of Chuang & Associates, it found the FDIC’s

search of the law firm to be proper. 21a-26a.

The District Court’s disposition of the other prong of

petitioner’s suppression motion, relating to the week-long

search of Golden Pacific by the OCC, was less definitive.

During a colloquy on the morning trial began, the court

noted that it had “considerable difficulty with this ob-

jection belonging to anyone but [petitioner’s co-

defendant],” because the records examined by the OCC

were for the most part obtained from the co-defendant’s

office. 28a. When the question of petitioner’s standing

on this suppression motion was raised, the court com-

mented that “jwje’ll get to that separately.

8 Petitioner contended below that the offices of other attorneys in

his firm were searched as well, and that evidence seized from those

searches were introduced against him. The lower courts rejected this

claim and petitioner does not rely on it herein.

[w]hether Dr. Chuang has some expectation of privacy.”

31a. In fact, no express ruling was made on petitioner’s

standing.

The court did go on to discuss the merits of the motion

as it applied to the co-defendant, stating that “the cases

do hold that there—that an employee with a private

office . . . has sufficient expectation of some kind of pri-

vacy in that place to give her standing with respect to

a true search of her office.” 29a. During colloquy with

counsel for petitioner’s codefendant, the court expressed

“great difficulty [with] holding that on the face of this

ancient statute it is unreasonable for the bank examiners

of the office of the controller of the currency, who was

obligated by law at least twice a year to examine the

affairs of every national bank, to go to a magistrate and

get a search warrant for every such examination. I

think it is unduly burdensome and... I think the stat-

ute provides the probable cause that a magistrate would

find because it is the obligation of the OCC to examine

the bank.” 33a. The court felt it was unnecessary to

consider the statute’s failure to limit the scope of a

search because there was no suggestion that the examin-

ers had broken into the bank. Zd.

After the jury’s verdict, the court returned to the sup-

pression issue, noting that ‘although the parties appar-

ently did not understand [the earlier colloquy] as a dis-

position, it was my intention at the time to make such

a disposition.” The court then stated that “I had con-

cluded that [the co-defendant] was the only one of the

defendants with some privacy interest in the contents of

her own space,” and that therefore only she had stand-

ing to challenge the examination of the bank records.

The court further ruled that “the doctrine that a search

warrant is required does not apply in a situation like

the regular examination of a national bank in which

there is a statutory duty on the OCC regularly to exam-

ine the records of the bank.” 35a.

2. The Court of Appeals

The Court of Appeals affirmed the denial of both sup-

pression motions. Without passing on the constitution-

ality of 12 U.S.C. § 481, the court ruled that petitioner

lacked standing to challenge the OCC’s search of Golden

Pacific. The court noted that the documents came prin-

cipally from the office of petitioner’s co-defendant, and

that petitioner knew that the documents were subject to

periodic examination by the OCC. Thus, the court ques-

tioned whether petitioner demonstrated a subjective ex-

pectation of privacy in these documents, but assumed

that he did. 7a-8a.° However, the court held that peti-

tioner’s subjective expectation of privacy was not “one

society considers reasonable.” According to the Court of

Appeals, “ijn view of the pervasive nature of federal

regulation of the banking industry, [petitioner], as an

officer of the bank, knew that bank documents, whether

kept in his office or another office, were subject to peri-

odic examination by the OCC.” Thus, any “privacy in-

terest is attenuated to the point where any warrantless

examination of his office pursuant to a regulatory scheme

may be reasonable within the meaning of the Fourth

Amendment.” 8a-9a. The Court of Appeals apparently

had second thoughts about this blanket exemption of ad-

ministrative searches from the Fourth Amendment, how-

ever, for it went on to note that none of the documents

at issue were obtained from petitioner’s personal office,

and to leave open the theoretical possibility that he might

®The court’s assumption was clearly correct. The government

itself relied at trial upon testimony that petitioner had concealed

the records pertaining to the non-negotiable certificate program

from prior government examination and that access to them was

limited, even as to bank employees. Tr. 2300-01. Cf. United States

v. Brien, 617 F.2d 299, 306 n.9 (ist Cir.), cert. denied, 446 U.S. 919

(1980) (noting relevance to standing issue of limited access to seized

records and of fact that defendants “went to great length to keep

[their] methods of operation secret.’’).

have had standing to challenge a seizure of records from

his personal office. 9a."°

With respect to the FDIC search of the law firm,

petitioner did not on appeal challenge the FDIC’s author-

ity as receiver to search Golden Pacific. See p. 3 nl

supra. Nor did petitioner contest that under appropriate

circumstances the FDIC as receiver of a bank can search,

without a warrant, premises other than the bank’s offices.

Petitioner contended, however, that such a search could

not be conducted in the absence of probable cause to be-

lieve that the premises searched were being used to con-

duct the bank’s business, and that no such probable cause

existed in this case. While taking note of petitioner’s

argument that probable cause was required, the Court

of Appeals held only that there was “sufficient cause for

the FDIC to believe that there was a commingling of

activities in the area searched,” because the law office

was petitioner’s only office in the bank building, the !aw

firm and the bank shared telephone lines, there was “easy

access” to the bank from the firm, and there was no

building directory listing the firm. lla.

10 In both the District Court and the Court of Appeals, the govern-

ment contended that evidence derived from the OCC’s search was

properly admitted even if the statute authorizing the search was

unconstitutional, because the OCC’s reliance on 12 U.S.C. § 481 was

objectively reasonable within the meaning of Jllinois v. Krull, 480

U.S. 340 (1987). In light of the lower courts’ failure to rule on this

argument, the patent unconstitutionality of § 481 under prevailing

constitutional standards, see pp. 17-21 infra, and the evidence that

the OCC itself entertained some doubt about its authority to con-

duct the examination, see p. 6 supra, this Court should not uphold

the admission of the evidence on this basis.

REASONS FOR GRANTING THE WRIT

The questions presented by this case are of undeniable

importance in the criminal justice system. The issues

involved will recur with increasing frequency as the pros-

ecution of white-collar crime, and specifically fraud

against financial institutions, becomes more and more

aggressive. Law enforcement officials need clear guide-

lines as to what searches they can lawfully undertake;

lower courts as well need this Court’s guidance to assess

the legality of those searches. The decision of the Court

of Appeals in this case, however, conflicts with the deci-

sions of other courts of appeals and of this Court on

these important questions of federal law, and requires

review by this Court to ensure uniform and correct ap-

plication of Fourth Amendinent law.

I. PETITIONER’S STANDING TO CHALLENGE THE

OCC SEARCH

The Court of Appeals ruled that petitioner could not

challenge the search of Golden Pacific’s records by the

OCC because he had no reasonable expectation of privacy

in Golden Pacific’s records. The court conceded that a

person can have a reasonable expectation of privacy in

her workplace as well as in her home. 6a; see O’Connor

v. Ortega, 480 U.S. 709 (1987); Mancusi v. DeForte,

392 U.S. 364 (1968). The court found, however, that

any expectation of privacy petitioner had in bank docu-

ments was not reasonable because he “knew those docu-

ments were subject to periodic examination by the OCC,”

and becaus2 the documents “were found in areas other

than [petitioner’s] office.” 9a.

In making the assessment of a reasonable expectation

of privacy depend solely unon these two factors——the ex-

istence of an administrative inspection scheme and the

fact that the documents were not found in petitioner’s own

office—the Court of Appeals created new and erroneous

Fourth Amendment law. Its holding squarely conflicts

with the decisions of the Courts of Appeals for the First

and Tenth Circuits in United States v. Brien, 617 F.2d

299 (1st Cir.), cert. denied, 446 U.S. 919 (1980), and

United States v. Leary, 846 F.2d 592 (10th Cir. 1988).

Both of those cases, like this one, involved heavily regu-

lated industries whose records are subject to inspection

by government agencies pursuant to statute; both in-

volved challenges to a search of an entire business prem-

ises, not just the defendant’s private office. And in both

cases the Court of Appeals rejected the government’s ar-

guments that the defendants lacked standing.

In Brien, the defendants were employed by Lloyd, Carr

& Co., a commodities option “boiler room.” The commodi-

ties futures business is extensively regulated pursuant to

the Commodity Exchange Act and the Commodities Fu-

tures Trading Commission Act, 7 U.S.C. $1 et seq., and

Lloyd, Carr was thus required to make its records avail-

able for inspection by the Commodities Futures Trading

Commission. 7 U.S.C. § 6g(1); 17 C.F.R. § 32.7(e): see

617 F.2d at 304. The defendants challenged a search

warrant which authorized seizure of “most of the busi-

ness records of Lloyd, Carr.” 617 F.2d at 306. The First

Circuit, adopting the district court’s multi-factor analysis,

rejected the government’s contention that the defendants

did not have a reasonable expectation of privacy sufficient

to permit them to challenge the search. Jd. at 305-06."'

In contrast to the Second Circuit’s decision in this case,

the court did not limit defendants’ standing only to docu-

ments that were seized from their individual private of-

fices (although it identified that as one relevant factor,

see n.1l svpra), nor did it hold that the fact that the

11 The district court in Brien had focussed upon six factors:

“(1) his [each defendant’s] position in the firm; (2) did he

have any ownership interest; (3) his responsibilities: (4) his

power to exclude others from the area, if any; (5) did he work

in the area: (6) was he present at the time of the search.”

617 F.2d at 306.

records were subject to inspection deprived defendants of

a reasonable expectation of privacy.

United States v. Leary invoived a company alleged to

have illegally exported certain goods. Federal regulation

imposed “comprehensive recordkeeping requirements” on

exporters and made those records subject to inspection by

government officials. 15 C.F.R. § 387.13(f) (1) (1987)

(now 15 C.F.R. § 787.13(f) (1)); see 846 F.2d at 597.

Two officers of the exporter challenged a search warrant

pursuant to which twenty boxes of business records were

seized. The Tenth Circuit held that defendants had stand-

ing to challenge the search, not limiting their standing to

records seized from their private offices. The court spe-

cifically rejected the government’s argument that the

existence of a comprehensive regulatory scheme deprived

the defendants of a reasonable expectation of privacy.

846 F.2d at 597.

The decision of the Second Circuit in this ease thus

cannot be squared with the decisions of the First Circuit

in Brien and of the Tenth Circuit in Leary. Moreover,

the decision below was wrong. By limiting its analysis

to these two factors, the Court of Appeals created ex-

actly the sort of “talisman[s]” that cannot govern stand-

ing determinations in this context. O’Connor v. Ortega,

480 U.S. at 709 (plurality opinion) .™

In addition, the specific factors relied upon by the

Court of Appeals are improper. Perhaps the most perni-

cious and important error of the Court of Appeals was

its reliance on the statute making bank records subject

to inspection. Its reasoning is entirely circular: accord-

ing to the Court of Appeals, petitioner cannot chailenge

the constitutionality of the statute permitting warrantless

12 Thus, in O’Connor this Court canvassed the entire record to

determine whether a doctor had a reasonable expectation of privacy

in certain parts of his office at a public hospital and, to the extent

that the record was unclear, indicated that further proceedings were

required. 480 U.S. at 718 (plurality opinion).

inspection of bank documents because the statute made

the documents subject to warrantless inspection. This

proposition, if taken seriously, would utterly eviscerate

the Fourth Amendment’s warrant requirement. It would

make any warrantless inspection statute passed by Con-

gress immune from challenge. It also conflicts with all

of this Court’s warrantless inspection cases: never has

this Court avoided the necessity of assessing the constitu-

tionality of an administrative inspection statute by sim-

ply finding that the existence of the statute deprived the

defendant of a legitimate interest of privacy in the rec-

ords subject to inspection. See pp. 17-21 infra.®

The other factor relied upon by the Court of Appeals

in denying that petitioner had a reasonable expectation >f

privacy in the bank’s documents is that the documents

were seized from the office of petitioner’s co-defendant,

rather than from petitioner’s own office. This reliance

upon the identity of the person whose office was searched

igncres the fact that more than one person can have a

reasonable expectation of privacy in a particular place,

and is analogous to the position urged by the state in

Minnesota v. Olson, 110 S.Ct. 1684 (1990). In Olson the

state contended that an overnight guest did not have

standing to challenge the search of the home in which he

was staying. This Court rejected the state’s argument.

It noted that even though “the guest has a host who

has ultimate control of the house,” the guest may still

have a legitimate expectation of privacy in the prem-

ises. Jd. at 1689-90. Similarly, a court cannot deny

standing to a person to challenge the search of business

18 The Tenth Circuit in Leary discussed the fallacy of relying upon

the reduced expectation of privacy in regulated industries to deprive

a defendant of standing to chailenge an administrative inspection

law. As the court noted, while that reduced expectation of privacy

“may justify a statutory authorization of warrantless inspections

or searches,” and may affect the level of probable cause required to

obtain a warrant, it does not deprive a defendant of the right to

challenge the statute. 846 F.2d at 597 n.6.

premises simply Yecause the premises are someone else’s

private office; it must canvass all the circumstances to

determine whether she has a legitimate expectation of

privacy in the premises searched.'* The Court of Ap-

peals’ failure to do so in this case therefore conflicted

with the decisions of this Court, as well as those of the

Tenth and First Circuits noted above. In addition, the

Ninth Circuit has affirmed a district court decision

squarely rejecting the argument that a defendant has

standing to challenge the search only of his own office.

United States v. Lefkowitz, 618 F.2d 1313, 1316 n2

(9th Cir. 1980), affg 464 F. Supp. 227, 230-31 (C.D.Cal.

1979), cert. denied, 449 U.S. 824 (1980).

~The decision of the Court of Appeals denying peti-

tioner standing to challenge the OCC’s warrantiess

search of Golden Pacific National Bank thus conflicted

with important Fourth Amendment principles, with the

decisions of this Court, and with the decisions of other

Courts of Appeals. It has obvious importance for the

14 Analysis of the factors relied upon by other courts in determin-

ing whether a defendant has standing to challenge the search of

corporate premises, see, e.g., United States v. Horowitz, 806 F.2d

1222, 1225 (4th Cir. 1986); United States v. Moscatiello, 771 F.2d

589, 601 (1st Cir. 1985), vacated on other grounds sub nom. Carter

v. United States, 476 U.S. 1138, on remand, 803 F.2d 20 (1st Cir.

1986), vacated on other grounds sub nom, Murray v. United States,

480 U.S. 916 (1988); United States v. Brien, 617 F.2d at 305-06:

United States v. Lefkowitz, 464 F. Supp. 227, 230-31 (C.D.Cal. 1979),

aff'd, 618 F.2d 1313 (9th Cir.), cert. denied, 449 U.S. 824 (1980),

demonstrates that petitioner has standing. Petitioner had a signifi-

cant proprietary interest in Golden Pacific: he or his family owned

almost half o¥ the bank’s stock. Tr. 7857. More importantly, the

record demonstrates significant operational control by petitioner

over the bank and all of its premises. F.¢., Tr. 431-32, 491-95, 2053,

3057. As the government argued, petitioner “did have his fingers in

every area of the bank.” Tr. 7939. The records were kept in non-

public areas of the bank, and petitioner was present during the

search. Thus, the extent of petitioner’s control over Golden Pacific

and its records—-in particular the records of the non-negotiable cer-

tificate program—gave him standing to challenge this search.

growing field of prosecutions of financial institutions; if

followed by other courts, it would effectively preclude

Fourth Amendment challenges to the validity of 12

U.S.C. § 481, as well as other administrative inspection

statutes. It merits the attention of, and correction by,

this Court.

II. THE CONSTITUTIONALITY OF 12 U.S.C, § 481

The district court upheld the validity of 12 U.S.C.

§ 481, the statute which empowers the OCC to inspect

bank records without a warrant and pursuant to which

the OCC conducted its week-long search of the records

of Golden Pacific.” In so doing, the court decided an

important question of federal law that has not been, but

should be, decided by this Court, and did so in a manner

that is inconsistent with controlling precedent.

That the constitutionality of Section 481 presents an

important question of law cannot be disputed. Allega-

tions of fraud in the banking industry are detailed al-

most daily in the newspapers; calls for vigorous prosecu-

tion of banking executives abound from legislators and

the public at large. Congress has recently increased the

penalties for frauds affecting financial institutions and

has directed the Justice Department to increase its pros-

ecution of such offenses. Financial Institutions Reform,

Recovery, and Enforcement Act of 1989, P.L. 101-73,

103 Stat. 1838, $§ 961-68.'° These prosecutions will of

necessity rely upon the fruits of warrantless inspections

of the records of financial institutions, as did the prose-

cution of petitioner. Such inspections are made not only

15 As noted supra, p. 10, the Court of Appeals did not specifically

address the constitutional validity of Section 481 because of its

ruling on the standing issue.

16 Just recently, in fact, President Bush announced plans for a

new task force to ensure aggressive prosecution of crimes against

financial institutions. “Bush Promising Quicker Pursuit In Savings

Cases,” The New York Times (June 23, 1990) at 1.

by the OCC pursuant to the authority purportedly

granted by 12 U.S.C. § 481, but by other regulatory

agencies as well.’’ The viability of these prosecutions,

therefore, will depend in substantial part upon the valid-

ity of statutes such as Section 481. If Section 481 is

unconstitutional—-as petitioner believes this Court’s prior

decisions dictate—Congress should be afforded the op-

portunity to act quickly to enact a valid inspection

scheme.

The general standards governing the constitutional

validity of administrative searches such as this one have

been delineated by this Court in a series of decisions be-

ginning with See v. City of Seattle, 387 U.S. 541 (1967),

and Camara v. Municipal Court, 387 U.S. 523 (1967);

extending through Marshall v. Barlow's, Inc., 436 U.S.

307 (1978); and most recently embodied in New York

v. Burger, supra. It is clear that “the Fourth Amend-

ment’s prohibition against unreasonable searches applies

to administrative inspections of private commercial prop-

erty,” Donovan v. Dewey, 452 U.S. 594, 598 (1981),

even in a “closely regulated” industry such as banking.

New York v. Burger, 482 U.S. at 699-700. Warrantless

administrative inspections of private commercial prop-

erty are thus permissible only if the searches are con-

ducted pursuant to a statute which “provides a consti-

tutionally adequate substitute for a warrant.” Donovan

v. Dewey, 452 U.S. at 603; accord New York v. Burger,

482 U.S. at 703. In particular, for an administrative in-

spection to be valid it must be under a statute which

“perform({s] the two basic functions of a warrant: it

must advise the owner of the commercial premises that

the search is being made pursuant to the law and has a

properly defined scope, and it must limit the discretion

of the inspecting officers.” Id. (emphasis supplied). This

17 See, €.g., 12 U.S.C. §1820(b) (Federal Reserve Board); 12

U.S.C. § 1464(d)(1) (as amended by Financial Institutions Reform,

Recovery, and Enforcement Act of 1989, P.L. 101-73, 103 Stat. 183,

§ 301) (Office of Thrift Supervision).

last stricture is met only if the statute delineates the

“time, place, and scope” of authorized inspections. United

States v. Biswell, 406 U.S. 311, 315 (1972); see New

York v. Burger, 482 U.S. at 703. Without such restric-

tions on the “time, place, and scope” of administrative

searches, a statute would “devolve{] almost unbridled

diseretion upon executive and administrative officers,”

Marshall v. Barlow’s, Inc., 486 U.S. at 323—the precise

vice that the Fourth Amendment was intended to elimi-

nate by requiring prior judicial supervision of searches.

See United States v. United States District Court, 407

U.S. 297, 315-21 (1972) .'8-

Section 481 permits just the sort of unfettered admin-

istrative discretion that this Court’s cases condemn. It

provides no limits on “time, place, and scope” of inspec-

tion, which alone provide a constitutionally adequate sub-

stitute for a warrant. Rather, the statute permits the

OCC to examine banks “as often as [it] shall deem nec-

essary,’ and to inspect whatever records are necessary

“to make a thorough examination of all the affairs of

the bank.” Supra p. 2. Thus, the OCC has unbounded

authority to determine the frequency, timing and scope

of inspections: they can be made as often as the OCC

desires, at whatever time of the day or night the OCC

chooses, and may be as wide-ranging or as narrow as the

OCC, in its own discretion, chooses. Even a closely regu-

lated business such as banking cannot, consistent with

the Fourth Amendment and this Court’s decisions, be so

subject to the arbitrary whim of government agents. As

18 “(T |hose charged with... investigative and prosecutorial duty

should not be the sole judges of when to utilize constitutionally

sensitive means in pursuing their tasks. The historical judg-

ment, which the Fourth Amendment accepts, is that unreviewed

executive discretion may yield too readily to pressures to

obtain incriminating evidence and overlook potential invasions

of privacy and protected speech.”

United States v. United States District Court, 407 U.S. 297, 317

(1972).

an instructive contrast, the junkyard inspection statute

upheld by this Court in New York v. Burger, supra, per-

mitted inspection only during regular business hours and

“narrowly defined” the scope of administrative searches

to specified kinds of records and vehicles. As a result,

this Court held that “the statute, as a whole, places ade-

quate limits upon the discretion of the inspecting officers.”

482 U.S. at 711-12 & n.21.

The district court gave three justifications for per-

mitting this warrantless search: (1) requiring OCC ex-

aminers to obtain a warrant would be unduly burden-

some; (2) “it is the obligation of the OCC to examine

the bank” pursuant to the statute; and (3) statutory

limitations on time, place and scope of the search were

unnecessary because the OCC examiners did not act

abusively. 33a. None of these rationales is relevant to

the inquiry mandated by this Court’s decisions.

The argument that the search was valid because the

statute requires the OCC to conduct examinations is ob-

viously fallacious. In each of the administrative inspec-

tion cases which has come before this Court, a statute has

authorized the challenged search, but the search has been

upheld only if the statute passes constitutional muster.

While the absence of a statute would be fatal to an ad-

ministrative inspection scheme, the existence of a statute

does not end the analysis but begins it.

Nor is the burden of obtaining a warrant a considera-

tion that this Court has deemed relevant in the context

of administrative searches. Surely the burden on the Oc-

cupational Safety and Health Administration to obtain

warrants before conducting inspections was equivalent

to that upon the OCC, yet that did not save the statute

in Marshall v. Barlow’s, Inc., 4836 U.S. at 316-21. More-

over, the district court undoubtedly exaggerated the bur-

dens on the government of following the command of the

Fourth Amendment. Administrative warrants are typi-

cally obtainable with a minimum of effort, id. at 320-21,

and Congress always has the alternative of enacting a

statute that validly confines the discretion of the OCC.

But the shortest answer to the district court’s reasoning,

of course, is that if the Fourth Amendment requires that

a warrant be obtained, the fact that law enforcement

might thereby be made less efficient is no answer. Mincey

v. Arizona, 437 U.S. 385, 393 (1978).

Finally, it is irrelevant that in this case the agents

may not have exceeded the authority which a properly

drawn warrant or statute would have provided them.

This Court has recently reiterated the “cardinal prin-

ciple” that “ ‘searches conducted outside the judicial proc-

ess, without prior approval by judge or magistrate, are

per se unreasonable under the Fourth Amendment—sub-

ject only to a few specifically established and well-

delineated exceptions.” Horton v. California, 58 U.S.

L.W. 4694, 4696 n.4 (U.S. June 4, 1990), quoting United

States v. Ross, 456 U.S. 798, 824-25 (1982); Mincey v.

Arizona, 437 U.S. at 390; Katz v. United States, 389

U.S. 347, 357 (1967). In this case, the government con-

tends that the administrative search exception applies.

That exception depends, however, upon the existence of

a regulatory statute that provides a “constitutionally ade-

quate substitute for a warrant.” If the statute fails ade-

quately to confine the agent’s discretion, the search is

invalid even if the agent did not abuse her discretion in

the particular case. New York v. Burger, 482 U.S. at

702-03."*

In short, the decision upholding the constitutionality of

12 U.S.C. § 481 is an important question of federal law,

likely to recur and potentially affecting numerous cases.

It was wrongly decided in this case, and this Court

should grant the petition for certiorari.

19 Cf. Florida v. Wells, 110 S.Ct. 1632 (1990) (inventory search

permissible only if based upon “standardized criteria . . . or

established routine’’).

Ill. THE SEARCH OF PETITIONER’S LAW OFFICE

The Court of Appeals upheld the FDIC’s search of

petitioner’s law office on the ground that the business of

the bank was commingled with the law office. The court’s

decision on this issue conflicts with that of the Seventh

Circuit in United States v. Cerri, 753 F.2d 61 (7th Cir.),

cert. denied, 472 U.S. 1017 (1985). The Seventh Circuit

in Cerri helu that officers with authority to search a busi-

ness without a warrant may not search other premises

unless they have, at a minimum, probable cause to believe

that the other premises are being used to conduct the

business. /d. at 64.°° While the Court of Appeals in this

case did not explicitly reject the probable cause require-

ment,*’ the facts it relied upon clearly do not establish

probable cause to believe that bank business was being

conducted from the law firm.

The court cited only three facts: that the law firm and

the bank shared telephone lines, that there was “easy

access” to the bank from the firm, and that there was

no building directory listing the firm. 1lla.2?. These

20 Judge Posner’s opinion for the court of appeals in Cerri

actually intimated that more than probable cause might be re-

quired, but did not find it necessary to determine the precise stand-

ard because the facts in that case demonstrated that the agents

knew to a certainty that the defendant was conducting his firearms

business from his home. 753 F.2d at 64.

21 The Court applied a “sufficient cause” standard. 11a.

22 The Court of Appeals also mentioned the fact that the law firm

was petitioner’s only office in the building. Ila. However, nothing

in the record suggested that the FDIC was aware of this at the time

it determined to search the law firm. Compare 3/9/88 Tr. 173

(FDIC official refers only to access to firm from bank and intercon-

nected telephone lines as basis for search). Nor did the district

court find that the FDIC knew of, or relied upon, this fact. 20a.

Obviously, probable cause must be tested by what was known to

the agents at the time of the search, not by what they subsequently

learned. Maryland v. Garrison, 480 U.S. 79, 85 (1987) (“[Wle

must judge the constitutionality of [officers’] conduct in light of the

information available to them at the time they acted.’’).

facts, however, do not come close to establishing “prob-

able cause” to believe that petitioner was conducting

bank business from the law firm; they do no more

than establish the existence of some relationship be-

tween the two entities. Cf. Sibron v. New York, 392

U.S. 40, 62-63 (1968) (probable cause not established

by mere association between defendant and drug ad-

dicts). Innumerable law firms throughout the country

represent banks and many of them doubtless have offices

in the same building as the bank they represent.” To

hold each of these firms subject to search if the bank

went into receivership would be drastic indeed; in this

case the FDIC agents prevented the other lawyers in the

firm from conducting their business during the days

that the search was in progress, and refused to allow

them to remove law firm files until the files were re-

viewed. 3/9/88 Tr. 99, 104-09. And nothing in the

facts cited by the Court of Appeals established anything

more than the existence of a close attorney-client rela-

tionship between the bank and the law firm.

Nor can it be claimed that the search could be con-

ducted upon a lesser standard than probable cause to

believe that the law firm was subject to search as part

of the bank. Arizona v. Hicks, 480 U.S. 321 (1987),

compels this conclusion. In Hicks this Court ruled that

items observed in plain view during a valid search could

not be seized unless there was probable cause to believe

that the items in question were evidence of a crime cr

contraband.** “Dispensing with the need for a warrant

is worlds apart from permitting a lesser standard of

cause for the seizure than a warrant would require,

23 Indeed, many large New York City law firms have offices in the

same buildings as the banks they represent. Obviously, the same

Fourth Amendment rules should protect Chuang and Associates and

a large firm such Milbank, Tweed, Hadley & McCloy.

24The Court made clear that the same reasoning applied to

searches as to seizures. 480 U.S. at 327-28.

i.e., the standard of probable cause.” 480 U.S. at 327

(emphasis in original).”* Similarly here, the FDIC’s

authority to search bank premises without a warrant

did not confer upon it unlimited power to search any-

where it wanted on the pretext that the premises were

part of the bank; unless the FDIC had probable cause

to believe the premises were subject to search as part

of the bank, the search was improper.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

ROBERT S. LITT

WILLIAMS & CONNOLLY

839 Seventeenth Street, N.W.

Washington, D.C. 20006

(202) 331-5000

Counsel of Record for Petitioner

Kuang Hsung J. Chuang

Dated: June 27, 1990

25 No exigent circumstances or compelling government necessity

existed to justify a search based upon less than probable cause.

Cf. Maryland v. Buie, 110 S.Ct. 1093 (1990).

a ol

APPENDIX

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

No. 692, Dockets 89-1309, 89-1406

UNITED STATES OF AMERICA,

Appellee,

, A

KUANG HsuNG J. CHUANG, a/k/a “JOSEPH CHUANG”,

Appellant.

Argued Feb. 7, 1990

Decided Feb. 28, 1990

Herve Gouraige, Asst. U.S. Atty., New York City

(Otto G. Obermaier, U.S. Atty., Martin Klotz, and Kerri

M. Bartlett, Asst. U.S. Attys., on the brief) for appeliee

US.

Robert S. Litt, Washington, D.C. (Bruce S. Oliver,

Elena Kagan, and Williams & Connolly, Washington,

D.C., on che brief) for appellant Kuang Hsung J.

Chuang.

Before TIMBERS, NEWMAN and ALTIMARI, Cir-

cuit Judges.

TIMBERS, Circuit Judge:

Appellant Kuang Hsung J. Chuang appeals from a

judgment of conviction entered August 1, 1989, in the

Southern District of New York, Miriam Goldman Cedar-

baum, District Judge, upon a jury verdict on twenty-two

counts, including misapplication of bank funds, making

false statements to bank regulatory officials, other sub-

stantive counts, and conspiracy. The district court de-

nied Chuang’s pretrial motions to suppress evidence ob-

tained from warrantless searches of his bank and law

offices.

On appeal, we find that the chief claim of error raised

by Chuang is that the district court erred in denying his

suppression motions. Other claims of error have been

raised and considered.

For the reasons which follow, we affirm the judgment

of conviction.

We shall summarize only those facts and prior pro-

ceedings believed necessary to an understanding of the

issues raised on appeal.

Chuang was the chairman, president and chief ex-

ecutive officer of the Golden Pacific National Bank

(“GPNB”). On June 17, 1985, after receiving informa-

tion from an informant about certain activities at

GPNB, the Office of the Comptroller of the Currency

(“OCC”) began a warrantless examination, pursuant to

12 U.S.C. § 481 (1988), of bank records pertaining to

the sale of a bank product known as “non-negotiable cer-

tificates.”” GPNB received no prior notice of this exami-

nation.

At about 1 P.M. on June 17, three bank examiners

from the OCC entered GPNB in Manhattan and went to

Chuang’s office on the third floor of the six-story bank

building. They produced an administrative subpoena and

requested Chuang to provide documents related to the

non-negotiable certificate program. In response to their

request, Chuang instructed Theresa Shieh, a_ vice-

president and cashier at GPNB, to produce the requested

documents. It is undisputed that virtually all the docu-

ments reviewed by OCC examiners came from Shieh’s

office located on the fourth floor of the bank building;

that no documents came from Chuang’s office; that these

documents were bank documents, not personal documents

belonging to Shieh or Chuang; and that virtually all of

the documents were given to the OCC upon request.

As a result of this examination, which lasted until

June 21, the OCC examiners concluded that the sale of

the non-negotiable certificates was fraudulent, and that

Chuang had misrepresented to regulatory officials facts

concerning the certificates and the use of bank funds

derived from the sale of those certificates. They dis-

covered that several hundred non-negotiable certificate

customers had approximately $17 million in claims

against GPNB. Not satisfied with the evidence concern-

ing the assets underlying those liabilities, the OCC de-

clined Chuang’s request to liquidate the assets. The OCC

determined that GPNB was insolvent and, on June 21,

1985, appointed the Federal Deposit Insurance Corpora-

tien (“FDIC”) as its receiver.

The FDIC secured the bank building on the evening of

Friday, June 21. The next day, it began the extensive

process of examining bank documents and calculating

assets and liabilities. A law firm, Chuang & Associates,

owned by Chuang, was located on the third floor of the

bank building. As part of its examination of GPNB, the

FDIC searched the third floor offices of Chuang and his

secretary where they performed both bank and law firm

work.

On May 19, 1987, Chuang was indicted, together with

Shieh, in a 48-count indictment. Prior to triai, defend-

ants moved to dismiss the indictment on various grounds,

including duplicity and failure to state an offense. They

also moved to suppress the evidence obtained by the OCC

during its warrantless examination of GPNB and evi-

dence obtained by the FDIC during its warrantless ex-

amination of the offices of Chuang and his secretary.

The district court denied these motions.

Prior to trial, two superseding indictments were re-

turned and several counts were severed. At the close of

the government’s case, several counts were dismissed by

the district court. The case was submitted to the jury on

twenty-two counts. Count One charged Chuang and

Shieh with conspiring to defraud the United States, to

misapply bank funds, and to make false statements to

bank regulatory officials and agencies, in violation of 18

U.S.C. § 371 (1988). Counts Two through Eleven

charged both defendants with making false statements

and concealing bank deposits from bank regulatory agen-

cies, in violation of 18 U.S.C. § 1001 (1988). Counts

Twelve through Fourteen charged both defendants with

making false statements to bank regulatory officials and

agencies, in violation of 18 U.S.C. § 1001. Counts Fifteen

through Twenty charged both defendants with misappli-

cation of bank funds, in violation of 18 U.S.C. § 656

(1988). Count Twenty-One charged Chuang with con-

spiracy to cover up illegal campaign contributions made

with bank funds, in violation of 18 U.S.C. § 371. Count

Twenty-Two charged both defendants with wire fraud,

in violation of 18 U.S.C. § 1343 (1988).

The essence of the government’s case was that defend-

ants defrauded bank customers by selling ordinary cer-

tificates of deposit called “non-negotiable certificates” ;

that they diverted the funds received to personal busi-

nesses without informing the customers or GPNB’s board

of directors and without insuring the funds with the

FDIC; and that they misrepresented the facts regarding

the non-negotiable certificate program to bank regulatory

officials.

The jury trial began on September 26, 1988 and con-

cluded on January 18, 1989, when the jury returned

guilty verdicts against both defendants on all 22 counts.

On June 1, 1989, the district court sentenced Chuang to

concurrent five year terms of imprisonment on all counts.

On August 1, 1989, the court ordered Chuang to comply

fully with all the terms of a settlement agreement with

the FDIC and to make restitution of $200,000.

This appeal by Chuang followed.

II.

Chuang’s chief claim of error centers upon two discreet

searches made respectively by the OCC and the FDIC.

We turn first to the propriety of the district court’s

order denying the motion to suppress documents obtained

by the OCC’s warrantless search.

In his motion to suppress bank documents obtainea by

the OCC during its June 1985 examination of GPNB

pursuant to 12 U.S.C. § 481 (1988), Chuang asserted

that the examination violated the Fourth Amendment.

Specifically, he claimed that § 481, which authorizes war-

rantless examinations of national banks, is unconstitu-

tional on the ground that it does not provide “a constitu-

tionally adequate substitute for a warrant”, as required

by the Supreme Court in New York v. Burger, 482 U.S.

691, 703 (1987). Observing that none of the documents

inspected by the OCC was obtained from Chuang’s office,

the district court ruled that Chuang lacked standing to

challenge the OCC’s examination of GPNB. Chuang as-

serts that the district court erred in this determination.

He renews on appeal his claim that § 481 is unconstitu-

tional. We need not address the merits of this constitu-

tional challenge since we agree with the district court

that Chuang has not established a legitimate expectation

of privacy in the bank documents examined by the OCC.

In reviewing the district court’s determination that

Chuang lacked standing, we are mindful that the Su-

preme Court has dispensed with the notion of standing

as being theoretically distinct from the substantive mer-

its of a Fourth Amendment claim. Rakas v. Illinois, 439

U.S. 128, 133, 140 (1978). In Rakas, the Court con-

cluded that “the better analysis forthrightly focuses on

the extent of a particular defendant’s rights under the

Fourth Amendment, rather than on any theoreticaily

separate, but invariably intertwined concept of stand-

ing.” Id. at 139. Put another way, the proper inquiry

turns on whether “the disputed search and seizure has

infringed an interest of the defendant which the Fourth

Amendment was designed to protect.” Jd. at 140.

With Rakas in mind, we focus on whether defendant

has established a legitimate expectation of privacy in the

area searched. United States v. Rahme, 813 F.2d 31, 34

(2 Cir. 1987) ; United States v. Smith, 621 F.2d 483, 486

(2 Cir. 1980), cert. denied, 449 U.S. 1086 (1981);

United States v. Brien, 617 F.2d 299, 305 (1 Cir.), cert.

denied, 446 U.S. 919 (1980). This threshold question

involves two separate inquiries: first, Chuang must dem-

onstrate a subjective expectation of privacy in a searched

place or item; and second, his expectation must be one

that society accepts as reasonable. United States v. Pau-

lino, 850 F.2d 93, 97 (2 Cir. 1988), cert. denied, 109 S.Ct.

1967 (1989).

It is well-settled that a corporate officer or employee

in certain circumstances may assert a reasonable expec-

tation of privacy in his corporate office, and may have

standing with respect to searches of corporate premises

and records. See, e.g., United States v. Leary, 846 F.2d

592, 595-96 (10 Cir. 1988); United States v. Brien,

supra, 617 F.2d at 305-06; United States v. Lefkowitz,

464 F.Supp. 227, 230-31 (C.D. Cal. 1979), aff'd, 618 F.2d

1313 (9 Cir.), cert. denied, 449 U.S. 824 (1980); see also

Mancusi v. DeForte, 392 U.S. 364, 369 (1968) (“one has

standing to object to a search of his office, as well as of

his home”). The question whether a corporate officer

has a reasonable expectaticn of privacy to challenge a

search of business premises focuses principally on

whether he has made a sufficient showing of a possessory

or proprietary interest in the area searched. E.g., United

States v. Brien, supra, 617 F.2d at 305-06; United States

v. Lefkowitz, supra, 464 F.Supp. at 230-31. Moreover,

he must demonstrate a sufficient “nexus between the area

searched and [his own] work space.” United States v.

Britt, 508 F.2d 1052, 1056 (5 Cir.), cert. denied, 423

U.S. 825 (1975). The presence of these factors necessar-

ily must be determined on a case-by-case basis. Cf.

O’Connor v. Ortega, 480 U.S. 709, 718 (1987) (“Given

the great variety of work environments in the public sec-

tor, the question of whether an employee has a reason-

able expectation of privacy must be addressed on a case-

by-case basis.’’).

Chuang asserts that, as a corporate officer of the bank,

he established a sufficient expectation of privacy in the

bank premises to dispute the legality of OCC’s examina-

tion. He claims that he had a significant proprietary in-

terest in the bank, since he or his family owned almost

half of all outstanding bank stock at the time the bank

was closed. He also claims that he exercised significant

operational control over the bank and all of its premises,

and that the areas searched were non-public areas ever

which ultimate control rested in his hands. Further, he

points out that he was present during OCC’s examination

of the bank. In view of the context in which OCC con-

ducted its search, however, we hold that these factors

were insufficient to establish a cognizable Fourth Amend-

ment claim.

We observe that the bulk of the bank documents pro-

duced for the OCC were obtained from the office of

another officer of the bank, Theresa Shieh. Her office

was located on the fourth floor of the bank building.

None of the documents came from Chuang’s office on the

third floor. Chuang failed to demonstrate a sufficient

nexus between the areas from which the documents were

obtained and his own office. Moreover, all of the docu-

ments examined were bank documents subject to periodic

examinations by the OCC, which has a statutory duty

under § 481 to examine the affairs of every national bank

at least twice a year. 12 C.F.R. § 4.11 (1989). Under

these circumstances, we are not convinced that Chuang

demonstrated even a subjective desire to keep the bank

documents private.

Moreover, even assuming Chuang demonstrated a sub-

jective expectation of privacy, we cannot conclude that

that expectation is one society considers reasonable. The

Supreme Court has held that the “expectation [of pri-

vacy] is particularly attenuated in commercial property

employed in ‘closely regulated’ industries.” New York v.

Burger, supra, 482 U.S. at 700; see also O’Connor »v.

Ortega, supra, 480 U.S. at 717 (‘“[p]ublic employees’

expectations of privacy in their offices, desks, and file

cabinets, like similar expectations of employees in the

privace sector, may be reduced by virtue of .. . legiti-

mate regulation”). Indeed, the Court has held that

“T'elertain industries have such a history of government

oversight that no reasonable expectation of privacy ...

could exist for a proprietor over the stock of such an

enterprise.” Marshall v. Barlow’s, Inc., 436 U.S. 307,

313 (1978) (emphasis added) (citing Katz v. United

States, 389 U.S. 347, 351-52 (1967)); see also O’Connor

v. Ortega, supra, 480 U.S. at 718 (“some government

offices may be so open to fellow employees or the pub-

lic that no expectation of privacy is reasonable’) (em-

phasis added).

In view of the pervasive nature of federal regulation

of the banking industry, Chuang, as an officer of the

bank, knew that bank documents, whether kept in his

office or another office, were subject to periodic examina-

tion by the OCC. The existence of a regulatory scheme

necessarily reduces a bank officer’s expectation of privacy

in his corporate office. New York v. Burger, supra, 482

U.S. at 700; O’Connor v. Ortega, supra, 480 U.S. at 717.

That privacy interest is attenuated to the point where

any warrantless examination of his office pursuant to a

regulatory scheme may be reasonable within the meaning

of the Fourth Amendment. New York v. Burger, supra,

482 U.S. at 702. This is not to say that Chuang had no

legitimate expectation of privacy in his own office so as

to deprive him of standing to challenge a search of that

office. He still could reasonably expect that no one other

than fellow employees and business or personal invitees

would enter his office, and that nothing would be removed

from his desk or file cabinets without his permission.

Mancusi v. Forte, supra, 392 U.S. at 369.

The bank documents examined by the OCC, however,

were obtained from areas of the bank other than

Chuang’s office. Virtually all of them came from Shieh’s

office. In view of the heavily regulated nature of the

banking industry, we decline to accept Chuang’s asser-

tion that he had standing to challenge the legality of the

examination of those documents. The fact that Chuang,

as an officer of a national bank, knew those documents

were subject to periodic examination by the OCC, coupled

with the fact that they were found in areas other than

Chuang’s office, lead us to conclude that Chuang’s Fourth

Amendment rights were not infringed by the OCC ex-

amination.

We do not suggest that, since banking is a heavily

regulated industry, no bank officer ever can have a rea-

sonable expectation of privacy in bank doc.ments, and

therefore that no bank officer ever can challenge success-

fully an examination of the bank pursuant to § 481.

Under the circumstances of the instant case, however,

where the heavily regulated nature of the banking indus-

try diminished a bank officer’s expectation of privacy in

bank documents, and where those documents were ob-

tained from areas of the bank other than the officer’s

own office, we decline to accept any privacy interest as

objectively reasonable.

We hold that Chuang cannot successfully challenge the

legality of OCC’s examination of GPNB because he has

not demonstrated a sufficient privacy interest in bank

10a

documents, not found in his office, that he knew were

routinely subject to OCC examination.

IIT.

This brings us to the propriety of the district court’s

order denying the motion to suppress documents obtained

by the FDIC’s June 1985 warrantless search of the of-

fices of Chuang and his secretary. United States v.

Chuang, 696 F.Supp. 910 (S.D.N.Y. 1988).

Although the FDIC did not obtain a search warrant

or seek court approval of any kind, Chuang does not chal-

lenge the authority of the FDIC, as a properly appointed

receiver of GPNB pursuant to 12 U.S.C. § 1821(d)

(1988), to examine the bank itself without a warrant.

He asserts, however, that his office and that of his sec-

retary were part of his law firm, Chuang & Associates,

and that the FDIC’s search of those “independent law

offices” went beyond any lawful authority of a receiver.

We disagree.

The district court found that, based on the physical

lay-out of GPNB and its close relationship to the law

firm, the offices of Chuang and his secretary were “an

important part of the Bank”, where not only law firm

business but also banking business was conducted. 696

F.Supp. at 913. The court correctly concluded, since

banking is a “closely regulated” business, that Chuang

voluntarily reduced the expectation of privacy in the

firm’s premises by operating his law firm out of the

same offices from which he ran GPNB. 7d. (citing New

York v. Burger, supra, 482 U.S. at 700).

Moreover, the FDIC, as a properly appointed receiver

of GPNB, had the power and duty pursuant to § 1821(d)

to marshal GPNB’s assets and to wind up its affairs. As

Chuang concedes, the FDIC as receiver stood in the

shoes of GPNB and had authority to look through all of

GPNB’s premises and papers without a warrant. See

lla

United States v. Gordon, 655 F.2d 478, 487 (2d Cir. 1981)

(Oakes, J., concurring) (when the Superintendent of In-

surance acts “by virtue of his receivership powers, [he

is] in effect acting as with a warrant issued upon a

showing of probable cause”). We have upheld a search

of a law office with a warrant as reasonable where the

law office is commingled with a business that is the legiti-

mate object of the search. National City Trading Corp.

v. United States, 635 F.2d 1020, 1024-26 (2 Cir. 1980).

Since the area searched by the FDIC clearly functioned

as a mixed-use bank and law office for Chuang, and since

the FDIC as receiver may properly search GPNB with-

out a warrant, we agree with the district court that the

FDIC search was reasonable.

We find no merit to Chuang’s assertion that the FDIC

had no probable cause to believe that Chuang’s office and

his secretary’s office were used for GPNB business.

United States v. Cerri, 753 F.2d 61, 62-64 (7 Cir.), cert.

denied, 472 U.S. 1017 (1985) (warrantless search of

home is permissible based on probable cause that it was

used for business purposes). The physical lay-out of the

bank building, including the shared telephone lines of

GPNB and the firm, the easy access to GPNB from the

firm, and the absence of any building directory listing

the firm, clearly suggested a commingling of space.

Moreover, the office searched was Chuang’s only office in

the entire bank building. These factors constituted suffi-

cient cause for the FDIC to believe that there was a

commingling of activities in the area searched.

We hold that the district court properly denied

Chuang’s motion to suppress the evidence obtained by

the FDIC in its search of the offices of Chuang and his

secretary. In reaching this conclusion, we are mindful

of the risk posed by searches of law offices which unnec-

essarily may intrude on attorney-client privileges. F.9.,

National City Trading Corp. v. United States, supra, 635

F.2d at 1026 (“a law office search should be executed

12a

with special care’). That risk, however, was not present

here since neither Chuang nor any third parties sought

to suppress documents on the ground that they were

privileged. United States v. Chuang, supra, 696 F.Supp.

at 915. Moreover, since there was sufficient cause to be-

lieve that the law offices of Chuang and his secretary

were commingled with bank business, the FDIC’s search

of those offices was proper. National City Trading Corp.

v. United States, supra, 635 F.2d at 1026.

One further matter: Chuang claims that liquor license

applications, which showed that his wife owned an inter-

est in two restaurants, were found during a search by

the FDIC of the office of one of his law associates and

were introduced improperly at trial. According to

Chuang, they were integral to the government’s proof

as to the bank misapplication counts. The government

maintains that those applications were obtained from the

New York State Liquor Control Authority (‘Liquor

Authority”), rather than from Chuang’s law offices. In-

deed, it asserts that no files containing liquor license

documents were found during the FDIC search. At trial,

liquor license applications submitted to the Liquor Au-

thority were introduced. The district court accepted the

government’s claim that the actual documents offered

were obtained from the Liquor Authority. Since the gov-

ernment denies that the source of those liquor license

applications was derived from the FDIC search, and de-

nies that any copies of those documents were found dur-

ing that search, we decline to disturb the district court’s

determination, absent any evidence to support Chuang’s

claim.

IV.

Chuang raises numerous other claims of error, con-

tending that: (1) the court erred in denying his motion

to sever the campaign contribution count; (2) the court

erred in denying his motion to suppress the false state-

ment counts on the ground of duplicity; (3) the govern-

13a

ment failed to plead and prove bank misapplication; (4)

the evidence was legally insufficient to establish wire

fraud; (5) the court improperly admitted hearsay evi-

dence; (6) the court improperly instructed the jury on

the definition of bank “deposits”; and (7) he was improp-

erly sentenced.

We have considered carefully these contentions and

hold that none has merit.

To summarize:

We hold that the district court properly denied

Chuang’s motion to suppress the evidence obtained from

the OCC’s examination of GPNB. We also hold that the

court properly denied Chuang’s motion to suppress evi-

dence obtained from the FDIC’s search of his office and

that of his secretary. We have considered carefully

Chuang’s other claims of error and find that none has

merit.

Affirmed.

14a

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

At a stated term of the United States Court of Appeals

for the Second Circuit, held at the United States Court-

house, in the City of New York, on the twenty-ninth day

of March, one thousand nine hundred and ninety.

Docket Number 89-1309

KUANG HsuNG J. CHUANG,

Defendant-A ppellant,

UNITED STATES OF AMERICA,

Appellee.

[Filed Mar. 29, 1990]

A petition for rehearing containing a suggestion that

the action be reheard in banc having been filed herein by

defendant-appellant, KUANG HSUNG J. CHUANG

Upon consideration by the panel that heard the ap-

peal, it is

Ordered that said petition for rehearing is DENIED.

It is further noted that the suggestion for rehearing

in bane has been transmitted to the judges of the court

in regular active service and to any other judge that

heard the appeal and that no such judge has requested

that a vote be taken thereon.

/s/ Elaine B. Goldsmith

ELAINE B. GOLDSMITH

Clerk

15a

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

At a stated Term of the United States Court of Appeals

for the Second Circuit, held at the United States Court-

house in the City of New York, on the twenty-eighth day

of February one thousand nine hundred and ninety.

Present: Hon. WILLIAM H. TIMBERS

Hon. JON O. NEWMAN

Hon. FRANK X. ALTIMARI

Circuit Judges,

Docket No. 89-1309, -1406

UNITED STATES OF AMERICA,

Appellee,

KUANG HsuNG J. CHUANG, a/k/a “JOSEPH CHUANG”,

Appellant.

[Filed Feb. 28, 1990]

Appeal from the United States District Court for the

Southern District of New York.

This cause came on te be heard on the transcript of

record from the United States District Court for the

Southern District of New York and was argued by coun-

sel.

ON CONSIDERATION WHEREOPF, it is now hereby

ordered, adjudged and decreed that the judgment of said

District Court be and it hereby is affirmed in accordance

with the opinion of this court.

16a

ELAINE B. GOLDSMITH

Clerk

by: /s/ Edward J. Guardaro

EDWARD J. GUARDARO

Deputy Clerk

Issue as mandate: April 5, 1990

17a

UNITED STATES DISTRICT COURT

S.D. NEW YORK

No. SS 87 Cr. 440 (MGC)

UNITED STATES OF AMERICA

Vv.

KuANG HsuNnG J. CHUANG, a/k/a “JOSEPH CHUANG,”

a/k/a “Dr. CHUANG,” and THERESA SHIEH,

a/k/a “JING JAI SHIEH,”

Defendants.

Sept. 20, 1988

Rudolph W. Giuliani, U.S. Atty., S.D.N.Y., New York

City by Herve Gouraige, Asst. U.S. Atty., for U.S.

Orans, Elsen & Lupert, New York City by Leslie A.

Lupert, Clement J. Colucci, ITI, for defendant Chuang.

Fischetti & Pomerantz, New York City by Mark F.

Pomerantz, Warren L. Feldman, for defendant Shieh.

OPINION

CEDARBAUM, District Judge.

Defendant Chuang has moved pursuant to Fed. R.

Crim. P. 12(b) (3) to suppress the evidence resulting

from a warrantless search of his office! This search of

1 Defendant Shieh’s office, located on a different floor of the build-

ing in which both defendants worked, is not at issue on this motion.

Nor does she have “standing” to move to suppress the evidence

taken from Chuang’s office, since she had no expectation of privacy

in his office.

18a

the offices of the president of a bank and his secretary

was performed by the receiver of the bank. The offices

were also used by the bank president to run a law firm

that was located inside the bank building. For the rea-

sons discussed below, defendant’s motion to suppress is

denied.

BACKGROUND

Defendant Joseph Chuang was the chairman, president

and chief executive officer of the Golden Pacific National

Bank (“Bank”). On June 21, 1985, as a result of an

examination by the Office of the Comptroller of the Cur-

rency, the Bank was closed and the Federal Deposit In-

surance Corporation (FDIC) was appointed receiver.

This suppression motion stems from the FDIC’s search

of the offices of Chuang and his secretary, which were

also used by Chuang to run a law firm. An evidentiary

hearing was held on certain aspects of this motion on

March 9, 1988. In addition, a number of affidavits have

been filed.

The law firm, Chuang & Associates, was a sole propri-

etorship owned by Chuang. The law firm was located on

the third floor of the Bank building in the Chinatown sec-

tion of Manhattan. The rest of at least the first four

floors of the building was occupied exclusively by the

Bank. Chuang and his secretary had their offices, in

which they performed both Bank and law firm work, on

the third floor, where a Bank telecommunications room

was also located. The rest of the third floor served as

office space for the law firm. Chuang’s third-floor office

was the only office he used as operating head of the Bank.

Chuang & Associates consisted of Chuang himself, three

other attorneys, and a paralegal or law clerk. The firm

was listed in the telephone directory and in the Martin-

dale-Hubbell law firm directory, and advertised in

Chinese-language publications. The Bank was a major

client of Chuang & Associates, but the firm had a number

19a

of other clients as well, and the Government concedes that

it had an existence separate from the Bank. Transcript

of Evidentiary Hearing (“Tr.”) at 74.

The relationship between the firm and the Bank was

an extremely close one. At the main entrance to the firm

on the third floor near the elevator was a large wood sign

marked “Chuang & Associates, Attorney [sic] at Law.”

Chuang’s office and the firm were also accessible via an

interior staircase from the Bank, which made it easy to

travel between the firm and the Bank’s offices on the first,

second and fourth floors. There was no sign to identify

the law firm when it was entered this way. Nor was

there a sign or directory at the entrance to the building,

in the lobby or in the elevator identifying the law firm as

an entity separate from the Bank. The law firm appar-

ently shared telephone lines with the Bank. There is no

evidence that there was any formal lease arrangement

between the Bank and the firm in 1985. In a one-year

lease in effect during the calendar year 1984 the firm

subleased space on the third floor from the Bank at a

below-market rate. The Bank also paid the salaries of all

secretaries at the firm. In exchange, the firm charged

the Bank lower rates than it charged other clients.

The FDIC secured the Bank building on the evening of

Friday, June 21, 1985. The following day, a Saturday,

large numbers of FDIC employees entered the building

to begin the extensive process of examining bank docu-

ments and calculating assets and liabilities. Ellen Stuart,

an FDIC attorney who was responsible for assessing

pending legal matters involving the Bank, testified that

she entered the law firm offices on June 22 through the

interior stairway. She said that she never saw the

“Chuang & Associates” sign that day.

Edward G. Miller, an attorney working at Chuang &

Associates, testified that when he arrived for work on

Monday, June 24, he informed the FDIC that Chuang &

Associates was a law firm separate from the Bank. Al-

20a

though Stuart testified that the FDIC took note of the

attorneys’ claims, and later those of the Bank’s lawyers,

that Chuang & Associates was a separate law firm, she

was skeptical of the claims at the time because of the

shared telephone lines, the easy access to the Bank and

the absence of any building directory listing the firm.

Chuang & Associates kept its law firm files in the of-

fice of Chuang’s secretary, as well as in other offices and

secretarial and open areas on the third floor. Chuang and

the Government agree that Chuang’s office and that of his

secretary were searched by the FDIC during the week of

June 24, and this motion only addresses evidence ob-

tained as a result of the search of those offices. Defend-

ants and the Government are looking into the question of

whether any of the Government’s evidence stems from a

search of other areas of the law firm. Therefore, I do

not now address the suppression motion insofar as it con-

cerns areas of the law firm other than the offices of

Chuang and his secretary.

DISCUSSION

In searching the premises of the Bank, the FDIC did

not obtain a search warrant or seek court approval of

any kind. Rather, it acted pursuant to its statutory duty

to marshal the assets of the Bank and to wind up the

Bank’s affairs. 12 U.S.C. § 1821(d). Chuang contends

that the FDIC’s search of his office and that of his secre-

tary violated the Fourth Amendment because the FDIC

was on notice by Monday, June 24 that the offices were

part of a law firm. He argues that a warrantless search

of a law firm—even if the law firm is intermingled with

another entity that can legitimately be searched without

a warrant—violates the Fourth Amendument.* The Gov-

2In his memorandum in support of the suppression motion,

Chuang briefly argues that suppression is required because of the

Government’s alleged failure promptly to prepare an inventory of all

the documents seized from the law firm. Memorandum in Support

~ 1 a RM NOD At NS

2la

ernment, in response, contends that under these circum-

stances no warrant was required.

It is well established that, “except in certain carefully

defined classes of cases, a search of private property with-

out proper consent is ‘unreasonable’ unless it has been

authorized by a valid search warrant.” G.M. Leasing

Corp. v. United States, 429 U.S. 338, 352-53, 97 S.Ct.

619, 628-29, 50 L.Ed.2d 530 (1977), quoting Camara v.

Municipal Court, 387 U.S. 528, 528-29, 87 S.Ct. 1727,

1730-31, 18 L.Ed.2d 930 (1967); see New Jersey v.

T.L.O., 469 U.S. 325, 351, 105 S.Ct. 733, 747, 83 L.Ed.2d

720 (1985) (Blackmun, J., concurring in the judgment).

It has been noted that searches of documents present spe-

cial dangers of intrusions upon privacy, Andresen v.

Maryland, 427 U.S. 468, 482 n. 11, 96 S.Ct. 2737, 2749

n. 11, 49 L.Ed.2d 627 (1976) (upholding search, with

warrant, of law office), and that “a law office search

should be executed with special care to avoid unnecessary

intrusion on attorney-client communications.” National

City Trading Corp. v. United States, 635 F.2d 1020, 1026

(2d Cir. 1980); see 2 W. LaFave, Search and Seizure:

A Treatise on the Fourth Amendment § 4.1(g) (2d ed.

1987).

There is nothing to suggest that any such special care

was taken by the FDIC in searching the offices of Chuang

and his secretary. Nor has the Governiient argued that

the urgency of searching these offices was so yreat that

obtaining a warrant would have been impractical. Never-

theless, two factors suggest that the search was not un-

reasonable, in violation of the Fourth Amendment, de-

spite the absence of a warrant. First, the offices of

Chuang and his secretary, in addition to being part of

the law firm, were also an important part of the Bank.

of Defendants’ Motion for Suppression at 19-20. However, the evi-

dence concerning this legal contention has not been developed, and

defendants did not mention it in their letter to the Court dated

May 2, 1988 listing the legal questions to be decided.

22a

Bank business in addition to law firm business was car-

ried on there. The exception of privacy in commercial

property is “particularly attenuated” where the property

is used in “closely regulated” businesses, New York v.

Burger, U.S. , 107 S.Ct. 2636, 2642, 96 L.Ed.2d

601 (1987), such as national banks.* Thus, by operating

his law firm out of the same offices from which he ran

the Bank, Chuang voluntarily reduced the expectation of

privacy in the firm’s premises that he might have enjoyed

had the firm been located elsewhere.

Second, it is not disputed that, as in United States v.

Gordon, 655 F.2d 478 (2d Cir. 1981), a case involving

a receiver for an insurance business, the FDIC as a re-

ceiver standing in the shoes of the Bank had authority to

look through all of the Bank’s premises and papers with-

out a warrant. Chuang makes no claim that such a

search, which was carried out for business purposes, vio-

lated his privacy interests in his office. See O’Connor v.

Ortega, 480 U.S. 709, 107 S.Ct. 1492, 94 L.Ed.2d 714

(1987) (work-related searches of employees’ offices, desks

and files are judged by reasonableness standard and are

not presumptively invalid without a warrant). He con-

tends only that, even if the FDIC had authority to search

Bank premises and documents, it had no authority to

search Bank premises that it had been told were also used

as part of a law firm.* But since the FDIC as receiver

had authority to inspect Bank property, and the offices of

Chuang and his secretary were Bank property used in

running the Bank, the force of Chuang’s argument con-

cerning the unreasonableness of searching those offices is

diminished. See National City Trading, 635 F.2d at 1024

(where space used by business subject to search is also

3 In another suppression motion in this case, defendants have not

contested that banking is a closely regulated industry.

4 A somewhat analogous question was left unresolved in Gordon

for failure to develop an adequate factual record in the district

court. 655 F.2d at 484.

en th |

23a

used by law office, space is properly subject to search for

books and papers of the business).

Faced with these circumstances, Chuang argues that

any warrantless search of a law office—even under the

facts of this case—is per se unreasonable absent exigent

circumstances. His argument is based almost entirely on

National City Trading. In that case, the Second Circuit

upheld a search, executed with a warrant, of the offices

of a commodity fraud “boiler-room” operation that was

run out of a lawyer’s suite of offices. As in this case, the

space used by the law office and the boiler-room operation

was “commingled.” 635 F.2d at 1024. The Second Cir-

cuit held the search not unreasonable, noting that war-

rants may be issued to search law offices upon a proper

showing of cause and emphasizing the commingling of

the activities of the boiler-room operation and of the law

Office. Id. at 1025-26. However, the Court did stress that

a law office search “should be executed with special

care.” Id. at 1026. The Court pointed with approval to

the “self-regulatory care” exercised by the Government

in planning and executing the search. Jd. An FBI agent

and an Assistant United States Attorney had explained

to the searching agents the need to avoid any disruption

of the law practice or any seizure of documents unre-

lated to the boiler-room operation. Closed file cabinets in

the lawyer’s office had not been examined. The lawyer’s

office had not been searched until the lawyer was present.

A legal file concerning the boiler-room operation had

been taken but had been sealed without having been in-

spected. And, of course, a search warrant had been ob-

tained. Chuang urges that where such measures are not

taken, or at least where no warrant is procured, a law

office search cannot be upheld. The Fourth Amendment

prohibition against “unreasonable searches” does not lend

itself to per se rules. But, in any event, such a rule does

not apply in this case.

24a

In Gordon, the New York State Superintendent of In-

surance was appointed receiver by a state court judge

after an insurance busines had been abandoned and the

Superintendent had met the statutory requirement of

showing that property would be removed from the state,

or would be lost, injured or destroyed. 655 F.2d at 483-

84. As receiver, the Superintendent had the statutory

power, inter alia, “to take and hold real and persona!

property.” Jd. at 483 n. 2. Similarly, in this case the

FDIC was appointed receiver pursuant to statute after

the Office of the Comptroller of the Currency had made

a determination that the Bank was insolvent. 12 U.S.C.

$$ 191, 1821(c). As receiver, the FDIC had the power

and the duty to marshal the Bank’s assets and to wind

up its affairs. 12 U.S.C. § 1821(d); Federal Deposit In-

surance Corp. v. Hatmaker, 756 F.2d 34, 36 n. 2 (6th

Cir.1985). In his coneurring opinion in Gordon, Judge

Oakes wrote that the Superintendent was, “when acting

by virtue of his receivership powers, in effect acting as

with a warrant issued upon a showing of probable

cause.” 655 F.2d at 487 (Oakes, J., concurring). Read-

ing Judge Oakes’s concurrence in Gordon together with

National City Trading suggests that the search at issue

here was permissible. If a warrantless search by a re-

ceiver is equivalent to a search with a warrant, and if a

search of a law office with a warrant is permissible where

the law office is commingled with a business that is the

legitimate object of the search, then the warrantless

search of a law office by a receiver is permissible where

the law office is commingled with the business for which

the receiver has been appointed.

The primary danger that courts and commentators

have seen in law office searches lies in the disclosure to

the Government of documents that are covered by the

attorney-client and the attorney work-product privileges.®

5 Where a law firm represents criminal defendants, the Sixth

Amendment right to counsel may also be implicated by a law office

Vr eet Meee Ben Bis

25a

See, e.g., Klitzman, Klitzman and Gallagher v. Krut, 744

F.2d 955, 960-61 (8rd Cir. 1984) (finding unconstitu-

tionally overbroad a warrant authorizing a search of a

law firm) ; O’Connor v. Johnson, 287 N.W.2d 400 (Minn.

1979) (en banc) (establishing per se rule that searches

of law offices are impermissible where the attorney is not

suspected of a crime and there is no threat that docu-

ments sought will be destroyed) ; Bloom, The Law Office

Search: An Emerging Problem and Some Suggested So-

lutions, 69 Georgetown L.J. 1, 12-23 (1980). In National

City Trading, addressing an argument that the warrant

was insufficiently particular because it authorized seizure

of privileged documents, the Second Circuit stated that

“Tt]o the extent that the files obtained here were privi-

leged, the remedy is suppression and return of the docu-

ments in question, not invalidation of the search.” 635

F.2d at 1026 (citations omitted). By the same logic, the

fact that a search involved privileged documents does not

render the entire search unreasonable, at least where

there was good reason to believe that documents that

could legitimately be searched would be found. Neither

Chuang nor any third parties have sought to suppress

individual documents seized by the FDIC on the ground

that they are privileged.

Finally, the Government relies on United States v.

Cerri, 753 F.2d 61 (7th Cir.), cert. denied, 472 US.

1017, 105 S.Ct. 3479, 87 L.Ed.2d 614 (1985). In Cerri,

the defendant was selling firearms from his home, al-

though the home was not the place of business from

which he was licensed to sell. Acting pursuant to a stat-

ute permitting inspection of the business premises of

federally-licensed firearms dealers, federal agents entered

the defendant’s house without a warrant and seized his

guns and business records. The Seventh Circuit upheld

search. See, e.g., O'Connor v. Johnson, 287 N.W.2d 400, 404 (Minn.

1979) (en banc). There is no evidence in the record that Chuang &

Associates represented criminal defendants.

26a

the search. It held first that a firearms dealer could not

evade the warrantless inspections provided for by the

statute simply by moving to an address different from

the one on his license. 753 F.2d at 63. That the search

was of a home did not alter that conclusion, despite the

fact that a warrantless search of a home absent exigent

circumstances generally constitutes a per se violation of

the Fourth Amendment, see United States v. Karo, 468

U.S. 705, 714-15, 104 S.Ct. 3296, 3302-03, 82 L.Ed.2d

530 (1984), because a home used as a place of business

occupies the same status for Fourth Amendment pur-

poses as does any other place of business. 753 F.2d at

64, citing Lewis v. United States, 385 U.S. 206, 211, 87

S.Ct. 424, 427, 17 L.Ed.2d 312 (1966). National City

Trading noted that, for Fourth Amendment purposes,

“there is nothing more sacred about a law office used for

business purposes . . . than there is about the premises

of a newspaper.” 635 F.2d at 1025. Similarly, there is

nothing more sacred about a law office used for business

purposes than there is about a home used for business

purposes. That a home may be searched under these cir-

cumstances without a warrant suggests the same con-

clusion about a law office.

Defendants have also moved to suppress certain rec-

ords because of alleged violations of the Right to Finan-

cial Privacy Act, 12 U.S.C. §§ 3401-3422. I need not

decide whether any violation of the Act took place, be-

cause even if it did, suppression is not a remedy au-

thorized by the Act, 12 U.S.C. § 3417, or appropriately

imposed in the exercise of the Court’s supervisory pow-

ers. United States v. Kington, 801 F.2d 733, 737 & n.1

(5th Cir. 1986), cert. denied, —— U.S. ——, 107 S.Ct.

1888, 95 L.Ed.2d 495 (1987); United States v. Frazin,

780 F.2d 1461, 1466 (9th Cir.), cert. denied, 479 U.S.

844, 107 S.Ct. 158, 93 L.Ed.2d 98 (1986); Uiited States

v. Whitty, 688 F.Supp. 48 (D.Me. 1988); United States

v. Lee, 667 F.Supp. 1404, 1419 (D.Colo. 1987).

ws rn i avi Fal

27a

CONCLUSION

Defendants’ motion to suppress evidence obtained as

a result of the FDIC’s search of the offices of defendant

Chuang and his secretary is denied.

SO ORDERED.

28a

[Excerpted Transcript of Record from the

United States District Court

for the Southern District of New York]

* * * *

[88] THE COURT: All right. Well, I would still like

to hold a hearing on the issue of consent in any event.

But in view of the way in which this has happened, I

think I’m going to have to reach the issue that was—

that accompanies it and which may turn out to be unnec-

essary, if I find that there was, in fact, consent.

I still have considerable difficulty with this objection

belonging to anyone but Ms. Shieh. if, as the Supreme

Court has repeatedly held, we are speaking of an inter-

est in a place—excuse me, an expectation of privacy in

a place, if we are speaking of an expectation of privacy

in Ms. Shieh’s own separate office, it seems to me that

she [89] may have some expectation of privacy in that

place under the cases.

In view of the fact that there is no question that the

records that she was asked to produce and did produce,

were clearly subject to examination by the OCC, and

that the OCC had a statutory obligation under Section

481 of Title 12 of the United States code, to examine the

affairs of every national bank at least twice a year, it

seems to me that the records that were produced by Ms.

Shieh from her office were clearly bank records that were

subject to examination by, and indeed that it was the

duty of the controller of the currency, to have those

records examined by a bank examiner on a periodic

basis.

So that if one were viewing the issue from the vantage

point of Ms. Shieh’s expectation of privacy in those par-

ticular records, as distinguished from her office, it might

be said that she did not have a reasonable expectation

of privacy in those records as distinguished from her

expectation of privacy in her own office.

But since, and these are what we used to call standing

questions that I am now addressing, what we used to

29a

call standing, what we now speak of in terms of expecta-

tion of privacy, the cases do hold that there—that an

employee with a private office, that is an office of her

own, has sufficient expectation of some kind of privacy

in that place [90] to give her standing with respect to

a true search of her office.

This case is a little bit of a hybrid because it’s not a

true search of her office, it is a request for documents

which are clearly bank documents that happen to be

located in Ms. Shieh’s office at the time.

MR. POMERANTZ: I would use the word demand.

THE COURT: Very well. Very well. I’ve not yet

reached the actual facts on that. And I thing we prob-

ably should hold a hearing on that aspect. Because for

the moment, I am treating it as something resembling

a search, in more traditional terms, even though this is

not really exactly a search. And whether it should be

treated as—like a search is open to question.

But in any event, what the—what Ms. Shieh is argu-

ing here is that this very old and well-established obliga-

tory obligation of the controlier of the currency, to ex-

amine the affairs of every national bank at least twice

a year, should be subjected to the requirement of a war-

rant in every case.

MR. POMERANTZ: I’m not sure. I know your

Honor pressed me on this when we were last before the

court, and I’ve given it some thought, I am not sure that

it is our position—that our position is as your Honor

just stated it. I believe—

[91] THE COURT: Are you not attacking the statute

on it’s face?

MR. POMERANTZ: We are, your Honor, to the fol-

lowing extent, to the extent that the government urges

that the statute provides an authority for conduct that

may be treated as a search, we believe the statute is un-

constitutional on its face.

If all that happened here was the examiners came and

said we would like to see these documents and the docu-

30a

ments were then produced, I’m not sure we would have

the same issue.

THE COURT: What else happened here? Then I’m

puzzled, that’s precisely what happened here.

MR. POMERANTZ: I think we can show your

Honor that what happened here is that the OCC came in

to the bank, cabinets were physically sealed, Ms. Shieh’s

movements were restricted to some extent, and that there

is a line that may be drawn between the conduct of—

I’m not abandoning—notwithstanding an argument that

the statute is unconstitutional in toto as your Honor has

stated it.

But I want to reserve in affect, the fallhack position

that at the very least the way that this examination was

conducted makes this examination akin to a physical

search, and that under those circumstances the statute

provides no constitutional authority for such a [92]

search.

THE COURT: Well, then, I have difficulty with what

facts you’re relying on.

It seems to me that this bank was examined on a reg-

ular basis, to Ms. Shieh’s own knowledge, and in—with

Ms. Shieh’s participation, many times in accordance with

the statutory obligation of the controller of the currency.

It was clearly forseeable, and all of the officers of the

bank and the bank itself had notice that the OCC was

required to make periodic examinations, and indeed did

make periodic examinations of these very books and

records.

MR. POMERANTZ: I don’t disagree with that.

THE COURT: I did not understand that there were

any particular facts that were being highlighted here,

other than the fact that these particular records came

from Ms. Shieh’s office.

MR. POMERANTZ: No. I’ve articulated in my letter

to the court, the one immediately preceding the Sep-

tember 23 letter, a number of other facts which I think

are relevant. The fact that OCC examiners—-I, for in-

ete ree oe

3la

stance, stayed in the bank we contend, before and after

normal business hours. The fact that there were certain

areas of the bank that were, and certain cabinets that

were physically sealed with red tape.

THE COURT: What has that got to do with the [93]

search of Ms. Shieh’s office, which is all that I’m address-

ing? We're only addressing the documents that were

taken from Ms. Shieh’s office because those are the only

documents as to which she had an expectation of privacy.

MR. POMERANTZ: I don’t want the record to indi-

cate that we’ve abandoned any claim that Dr. Chuang

has a similar expecta.ion for the reasons indicated in the

letter.

THE COURT: We'll get to that separately. That’s

a more recent issue. Whether Dr. Chuang has some ex-

pectation of privacy.

But it was—with respect to Ms. Shieh’s expectation

of privacy, which is what I understood was being raised

only with respect to records taken from her—given by

her from her own office, it is only with respect to that

search in quotes that I considered the—whether it was

unreasonable for the OCC to carry out its regular stat-

utory obligation to examine the books and records of

this national bank.

And I go back to what I understood was the defend-

ant’s position, that every examination of the books and

records of the national bank carried out under its pe-

riodic obligation to do so by the OCC requires a search

warrant.

MR. POMERANTZ: It is because I understood your

{94} Honor to be troubled by such a sweeping notion

that I have attempted to suggest to the court a lim-

iting combination of facts. And the distinction I’m try-

ing te draw is this, in previous examinations the OCC

first of all gave advance notice when it would be at the

bank and what records were required. In those instances

the examiners were put into a conference room and

records were shuttled in and out to the examiners.

32a

And I could understand a holding by the court that

such conduct intruded upon no expectations of privacy,

any reasonable expectations of privacy. And I am draw-

ing a line between that type of examination and an ex-

amination that was conducted in the fashion that this

one was conducted. Because I think there is a line that

can be drawn between those two very different types of

conduct. And that while your Honor could conceivably

hold that the statute authorized the former type of ex-

amination, consistent with the constitution, our argu-

ment would be for the reasons cited in our memorandum,

under all the administrative search cases, that conduct

_ of the type that occurred in this case is not constitution-

ally undertaken with only this statute as its basis.

THE COURT: And do I understand that what your

distinction is, is that in this case the bank examiner

actually entered Ms. Shieh’s office and requested docu-

ments [95] there and examined documents there?

MR. POMERANTZ: That’s one factor, Judge. I

think in a practical sense it goes much beyond that. This

was much more in the nature of a raid. I don’t want to

overstate it, but in comparison—

THE COURT: Are you suggesting that if there is

wrongdoing suspected, is that—there should be some

distinction?

MR. POMERANTZ: No, I’m suggesting that if what

the OCC really wants to do is search the bank, they’re

either supposed to act under a valid statute or supposed

to get a search warrant, which is precisely considered

doing in this case and wound up not doing.

THE COURT: But I have difficulty considering their

other examinations, not searches, in the sense in which

you are describing them. That is the mere fact that

they did not sit in a conference room and rather entered

Ms. Shieh’s office.

While that may give her standing because she has ex-

pectations of some privacy in her own office, if what they

did was request records as they had always done, and

examine them, I do not understand the distinction.

83a

And I have great difficulty applying an absolute rule

to the Fourth Amendment which speaks in terms of un-

reasonable searches. I have great difficulty holding that

[96] on the face of this ancient statute it is unreason-

able for the bank examiners of the office of the controller

of the currency, who are obligated by law at least twice

a year to examine the affairs of every national bank, to

go to a magistrate and get a search warrant for every

such examination. I think it is unduly burdensome and

I do not—I think the statute provides the probable cause

that a magistrate would find because it is the obligation

of the OCC to examine the bank.

MR. POMERANTZ: I’m not making a_ probable

cause-type argument, your Honor.

THE COURT: And as to how exactly a magistrate

would limit what is a search that is essentially limited

to the books and records of the bank by the statute, I

do not understand, that the Wang examiners have to

come in during business hours of the bank is clear be-

cause they do not break into the bank. Nor is there any

suggestion here that anybody broke in, nor have the bank

examiners ever broken in. .

MR. POMERANTZ: Let me explain what my argu-

ment is.

I think your Honor referred to the antiquity of the

statute, I think that’s precisely the problem.

In constitutional terms this statute came on the books

before all the law was made with respect to [97] admin-

istrative search. I think if Congress set down to draft

the statute now, it would articulate the kinds of safe-

guards that the Supreme Court has referred to in cases

such as Berger against New York. And there would be

no undo burden on the OCC.

The Congress could well draft a statute that would

indicate to the OCC when it is supposed to go in and

examine books and records, how much notice it’s supposed

to give, if any, and speak with some particularity.

It is because this statute, and again perhaps because

it is as old as it is, simply gives the OCC carte blanche

34a

to go in and do whatever it wants to inside the bank in

the way of examining records that we claim it is. | am

not suggesting a regime under which you—every time be-

fore there is an examination of a national bank that

the bank examiners and the OCC has to go running to a

magistrate.

My argument is that it so happens that because of

the sequence here, that the statute was enacted so long

before the applicable case law.

What happened is that the statute under which the

OCC is acting is indeed unconstitutional as applied to

conduct that can be analogized to a search. It’s only a

narrow group of cases your Honor could well find in

which that last statement is true that the conduct is a

analogus—analogous to a search. But in that category of

[98] eases, however broad or however narrow it is, I

am suggesting that the court should hold the statute to be

unconstitutional and the remedy undoubtly would be a

new statute, not a regime under which magistrates have

to become involved with this.

THE COURT: When I read this statute as authoriz-

ing, indeed obligating the controller of the currency regu-

larly to examine the books and records of every national

bank, I don’t understand how that is, as you say, anala-

gous or not analagous to a search. I am assuming that

you are arguing that that examination is analagous to a

search.

MR. POMERANTZ: I don’t want to bite off more

than I have to. I’m arguing that this particular examina-

tion at this bank this week was a search.

THE COURT: Well, you have not shown me sufficient

grounds for distinguishing this particular examination in

constitutional terms, in terms of reasonableness from all

of the examinations that had gone before and that are

required and we'll twice annually for every national bank

in the country.

*% * * om

[8610] THE COURT: Also, I would also like to raise

an entirely unrelated point, which was there was one oc-

35a

casion [8611] at the beginning of the trial where I tried

to put on the record, my disposition of the last suppression

motion, which I had denied. And I would like to—like it

to be clear that although the parties apparently did not

understand that as a disposition, it was my intention at

the time to make such a disposition.

And perhaps what I should do as well is cite particu-

larly the two Supreme Court cases that I considered most

closely analogous to this case.

I do not have the citations with me, but I’m sure you

are all familiar both with the case involving a visit by

a probation officer to—an unannounced visit by a proba-

tion officer to a defendant’s home.

I did consider the discussion we had on the motion with

respect to documents taken from Ms. Shieh’s office as set-

ting forth my view on that subject. That is, I had con-

cluded that Ms. Shieh was the only one of the defendants

with some privacy interest in the contents of her own

space. And therefore this was a motion as to which,

really, only Ms. Shieh had standing. And that her ex-

pectation of privacy in that place was not reasonably an

expectation that bank examiners would not examine the

records of the bank which were kept in her office and

which she supplied to them in response to requests.

To the extent that the motion was based on an [8612]

absolute requirement of a search warrant I concluded

that the doctrine that a search warrant is required does

not apply in a situation like the regular examination of

a national bank in which there is a statutory duty on the

OCC regularly to examine the records of the bank. And

we are speaking now of an examination of the records of

the bank. We are not speaking of private documents

which Ms. Shieh happened to keep in her office.

As I understand it, we are speaking only of bank rec-

ords in connection with that motion. Is that correct?

MR. GOURAIGE: I think that’s correct, your Honor.

The only document that the defendants claimed was not

a bank record was a mortgage repayment book. As your

36a

Honor may recall, the government had withdrawn that

document and said that that would not be offered at

trial.

THE COURT: All right, so that that document was

not used?

MR. GOURAIGE: That’s correct.

THE COURT: The only documents that were used at

trial were bank documents, to the extent that documents

were used, that had been examined, which were normally

located in Ms. Shieh’s office in the bank?

MR. GOURAIGE: That’s correct.

THE COURT: Very well.

MR. POMERANTZ: I believe that is correct, your

[8613] Honor. Of course it’s difficult, as I stand here,

to think back over the months of testimony and the—

THE COURT: Right. But it was my understanding

that the motion was really based on the assumption that

private personal documents were not at issue here, that

we were speaking, and apparently that is all that has

been offered, according to the government, in accordance

with that understanding.

And as to those documents, on the facts that were

established earlier in the case, I concluded, as I tried to

explain at the beginning, that a search warrant was not

required, and that Ms. Shieh’s reasonable expectations of

privacy were not improperly invaded, unconstitutionally

invaded by the examination of bank records which happen

to be kept in Ms. Shieh’s office and which in most cases

she actually turned over herself in response to requests.

* * * *

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.