Petition for Writ of Certiorari — Shetty v. United States (No. 06-110)

Supreme Court, U.S.

See

1)

06-110 JUL 19 2006

OFFICE OF THE CLERK

\

NO.

In The

SUPREME COURT OF THE UNITED STATES

SATISH SHETTY,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

On Petition For Writ Of Certiorari To The United

States Court of Appeals For The Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

ROBERT J. WATERS

Counsel of Record -

2115 Main Street

Santa Monica, CA 90405

(310) 399-3259

Counsel for Petitioner

SATISH SHETTY Rs

QUESTION PRESENTED FOR REVIEW

Whether government agents’ requests, direction and

encouragement of a private party to continue searching

documents stolen by the private party, to utilize in the agents’

criminal investigation and the subsequent use of the

information by the agents, converts the private party into a

government agent under the Fourth Amendment?

LIST OF PARTIES

All parties appear in the caption of the case on the cover

page.

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW ........

a ge” 2 2 RMR I gee eniote ne arr ee oe a

CONSTITUTIONAL AND STATUTORY

PAP Y Pe AUe OEY UP oo hee we Cheha ieee eee

STATEMENT OF THE CASE AND FACTS ........

REASONS FOR GRANTING THE WRIT ..........

I. Certiorari Should Be Granted to Determine

Whether Government Agents’ Requests, Direction

and Encouragement of Searches by a Private Party

of Documents Stolen by the Private Party to Utilize

in the Agents’ Criminal Investigation and the

Subsequent Use of the Information by the Agents

Converts the Private Party into a Government Agent

under the Fourth Amendment ..................

MR eee ee pera ous ee ria

ill

INDEX TO APPENDICES

Br oa ees Ea ine ees A-l

Memorandum of Ninth Circuit. Filed February 28,

2006.

PE ee eb i Be OR Bes pee ee eee bee es B-1

Ninth Circuit Order denying petition for rehearing

and rehearing en banc. Filed April 20, 2006.

PO Bs ae a oe ee aS C-]

United States Constitution, Fourth Amendment.

IV

TABLE OF AUTHORITIES

Cases Page

Burdeau v. McDowell, 256 U.S. 465, 41 S.

CE NE iow 10 ae OCRed oe a eae 1]

Coolidge v. New Hampshire, 403 U.S. 443,

a ee Ss Ca ho rae co Fs edt ee deh ee 1]

Knoll Associates, Inc. v. Federal

Trade Commission, 397 F.2d 530

Cree CS oy ee adi ak we bee es 10, 17, 18, 19

Lustig v. United States, 338 U.S. 74,

a Ge tre COTE vp ores bkid Cheek 12, 15, 17, 19

Skinner vy. Railway Labor Executives’

Association, 489 U.S. 602, 109 S. Ct.

EE oar he te bea ree en oa ganna 1]

United States v. Feffer, 83\ F.2d 734 (7th

RN perce hs sds oad k ewan Pe eS ees 17

United States v. Jacobsen, 466

ec Pe, PU oe Gk SS CIE ck ee ee cewwec ce 1]

United States v. Knoll, 16 F.3d 1313 (2nd

ee sro a oe a 10, 14, 16, 17, 19

United States v. Newton, 510 F.2d 1149 (7th

PP ars Sieh Oy cago wt ota sie eta 18

United States v. Sherwin, 539 F.2d 1

CUA SPP 6 BERGE OTS Fa FOES 10, 13

United States v. Veatch, 674 F.2d 1217 (9th

8 5 cng ge er ons Meera EAC i Okita eer 13

United States v. Walther, 652 F.2d 788 (9th

CU TOES. os 600i erie re bee ea ee 15

Walter v. United States, 447 U.S. 649, 100

sR re CE ko Veo bce bod oo kw ne ees 11, 35

CONSTITUTION AND STATUTES

U.S. Const. amend. Pe 2ativanasyieusnaers ous passim

BO Cie BREA ED BS. 4 8 ck ob eee ree ee l

Sor Ge a SE FE a iwc eee a art

Fae ees MR I or lo a oe ie en ke L, 3

FO Sr cate SL EEG 6 0s 059s OS a oe 3

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OPL “«'NS BELOW

On February 28, 2006, the United States Court of Appeals

for the Ninth Circuit affirmed petitioner’s conviction for one

count of bank fraud, in violation of 18 U.S.C. section 1344,

and one count of money laundering in violation of 18 U.S.C.

section 1956, subdivision (a)(1)(A)(i), following his

conditional guilty plea, and affirmed the district court's denial

of his motion to suppress information obtained from business

documents stolen by private parties dhd turned over to law

enforcement agents. The court of appeals’ Memorandum

decision appears in Appendix A to this Petition. On April 20,

2006, the United States Court of Appeals for the Ninth Circuit

denied petitioner’s timely petition for panel rehearing and

suggestion for rehearing en banc, which appears in Appendix

B to the Petition.

BASIS OF JURiSDICTION

The United States Court of Appeals for the Ninth Circuit

denied Petitioner’s appeal from his conviction and the district

court’s denial of his motion to suppress evidence followed by

a conditional guilty plea, and his petition for panel rehearing

and suggestion for rehearing en banc on April 20, 2006. This

Court’s jurisdiction is invoked under 28 U.S.C. §1254 (1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

United States Constitution, Fourth Amendment, is set

forth in Appendix C.

STATEMENT OF THE CASE AND FACTS

The United States Court of Appeals for the Ninth Circuit,

concluded that petitioner failéd to show that the government

acquiesced in the theft of his business documents and that the

government's mere use of documents improperly obtained by

a private party does not offend the Fourth Amendment.

Rejecting petitioner’s contention that while law

enforcement did not know of the private party’s theft and

search of petitioner's documents in advance, the

government’s subsequent requests, direction, and

encouragement of a continuing search of the stolen documents

tacitly approved whatever measures the private party took to

obtain the documents thereby converting the private party into

a government agent for Fourth Amendment purposes, the

Ninth Circuit affirmed the district court’s denial of

petitioner’s motion to suppress evidence on the ground that

once a private search is completed, the subsequent

involvement of government agents does not retroactively

transform the original intrusion into a government search.

Initially, petitioner was indicted with Joy Langford on

nine counts in the Central District of California. CR 1. On

November 26, 2003, the Government obtained a First

Superceding nine count indictment against petitioner and

Langford, alleging that petitioner and Langford devised and

participated in a scheme to defraud mortgage lenders and to

obtain money and property by means of false pretenses

through the preparation of fraudulent loan applications

submitted to Pan American Bank, causing Pan American

Bank to disburse loan proceeds in the amounts listed in

Counts | through 5, in violation of 18 U.S.C. Section 1344.

Counts 6 through 9 of the First Superseding Indictment

alleged that petitioner and Langford conducted financial

transactions involving the proceeds of specified unlawful

activity, namely, bank fraud, with the intent to promote the

carrying on of bank fraud in that petitioner and Langford (in

Count 9 only), and others, issued the checks as reimbursement

for down payments in violation of 18 U.S.C. Section 1956

subdivision (a)(1){A){i). Petitioner entered pleas of not guilty

on all counts. CR 60.

On January 29, 2004, petitioner filed a motion to suppress

evidence. CR 70; ER 7. Following a hearing on petitioner’s

motion to suppress evidence, the district court-denied said

motion. CR 91; 3/8/04 RT 60-64; ER 240-244.

On April 8, 2004, petitioner signed a plea agreement and

entered his plea of guilty to Counts 2 and 8 of the First

Superseding Indictment, reserving the right to appeal the

denial of his motion to suppress evidence. CR 94, 95. On

December 20, 2004, the District Court found petitioner guilty

of bank fraud in violation of 18 U.S.C. Section 1344 as to

Count 2, and money-laundering in violation of 18 U.S.C.

Section 1956 subdivision (a)(1)(A)(i) as to Count 8. The

Court ordered that petitioner be committed to the custody of

the Bureau of Prisons for a term of 15 months on each of

Counts 2 and 8 of the First Superseding Indictment, to be

served concurrently, to pay restitution to Pan American Bank

_in the amount of $37,478 pursuant to 18 U.S.C. Section

3663A; pay a special assessment of $200; and upon release

from imprisonment, placed on supervised release for a term

of five years, consisting of five years on Count 2 and three

years on Count 8, all such terms to run concurrently under

various terms and conditions. CR 122, pp. 1-3; 12/20/04 RT

36-38; ER 245-247. On the government’s motion the

remaining counts were dismissed. 12/20/04 RT 40.

At 8:00 a.m. on December 21, 1999, petitioner’s

employee, Mirza Baig, who lived at 360 Ladera Street,

Monterey Park, California, noticed that about 20 boxes of

petitioner’s miscellaneous business papers had been stolen

from the Ladera Street residence. Petitioner owned the

residence and stored his documents there. A police report

was filed. Keith Hayhurst, petitioner’s former employee,

contacted FBI Special Agent George Olivo (SA Olivo)

regarding petitioner, whom Hayhurst claimed was committing

real estate fraud. Hayhurst told SA Olivo that during a time

when he “had a legal right” to be in petitioner’s residence

doing construction work, he had “helped himself” to some of

petitioner’s documents that he believed would shed light on

petitioner’s crimes. 2/26/04 RT 12-13. :

Hayhurst told SA Olivo that he had “tons of evidence” or

“a whole lot of evidence” against petitioner. 2/26/04 RT 9,

2/23/04 RT 25. Hayhurst wanted the FBI to investigate

petitioner. Hayhurst was concerned about protecting himself

from petitioner. 2/26/04 RT 15. Hayhurst had two telephone

calls with SA Olivo about petitioner, one prior to December

21, 1999, the date of the burglary, and one call after. 2/23/04

RT 32.

In January 2000, Hayhurst was contacted by Detective _

Kim of the Monterey Park Police and questioned about the

theft of petitioner’s documents. Hayhurst told Detective Kim

that he was working with the FBI on petitioner’s case, and

that he was, or was going to become, an informant for the

FBI. 2/23/04 RT 13-18. Hayhurst also told Kim that he

believed petitioner was involved in fraudulent real estate

dealings. /d.

When Hayhurst did not hear back from the FBI, he and

Anthony “Tony” Mir, another one of petitioner’s former

employees, went to the Internal Revenue Service (IRS) on

April 17, 2000. They met with IRS Agents Brian Campbell

(Agent Campbell) and Michael Morris (Agent Morris).

2/23/04 RT 29, 33-36. Hayhurst had asked Mir for help and

Mir had previously given him a 12-page document, which

was turned over to the IRS at the meeting. 2/23/04 RT 26, 30.

Neither Mir nor Hayhurst were employees or roommates

of petitioner during the period of time they met with the IRS

agents. However, they continued to turn over detailed

documents and information related to petitioner’s business.

3/8/04 RT 33. Among the documents turned over by Mir and

Hayhurst at the initial meeting were petitioner’s credit report

and an internet profile of petitioner’s judgments and liens

both obtained from Hayhurst. /d. 34-35.

The relationship between the IRS and Hayhurst and Mir

continued for several months. As of June 9, 2000, Agent

Campbell became aware that Hayhurst was allegedly involved

in the theft of petitioner's documents. 3/1/04 RT 25. He

checked the Treasury Enforcement Communications System

and learned that burglary charges had been filed against

Hayhurst. He placed a call to Monterey Park Police Detective

Kim. 3/1/04 RT 26. On June 13, 2000, Detective Kim told

Agent Campbell that he believed Hayhurst was involved in

the theft of petitioner’s documents from the Ladera residence.

3/1/04 RT 28.

Agent Morris acknowledged that as of June 9, 2000, he

was also aware that there was an allegation by a police officer

that Hayhurst had stolen documents from petitioner during a

time that Hayhurst was providing Agent Morris with specific

information as to how petitioner conducted real estate

transactions. 2/26/04 RT 36. In a June 15, 2000 interview,

Hayhurst related to Agents Morris and Campbell that about

the same time the records were stolen from petitioner’s

Monterey Park residence, Hayhurst~-had been demanding

$38,000 from petitioner. 2/26/04 RT 37-40. It occurred to ~

Agent Morris that the theft of records by Hayhurst regarding

petitioner might relate to the IRS case. /d. 43.

Agent Campbell also believed that the stolen documents

could bear on the information Hayhurst was providing to law

enforcement about petitioner. He was concerned that the

burglary allegation could affect the ongoing investigation of

petitioner. Agent Campbell did not want to have stolen

documents provided to him because he “just knew that it

would come back and bite” him at a suppression hearing.

3/1/04 RT 29-30. Knowing this, he continued to accept the

documents from Hayhurst and Mir. 3/1/04 RT 43-45, 47, 51-

54.

On June 20, 2000, Detective Kim and Agent Campbell

spoke again. This time Detective Kim advised Agent

Campbell that there was an arrest warrant for Hayhurst, based

on allegations that he had stolen petitioner’s business records.

3/1/04 RT 32. Because it was not a federal warrant, Agent

Campbell did not see a need to arrest Hayhurst or to assist

Detective Kim. 3/1/04 RT 32.

On June 26, 2000, Agent Campbell met with Hayhurst at

the hospital where Hayhurst had been admitted for hernia

surgery. 3/1/04 RT 35. Between June 20 and June 26 Agent

Campbell had made no attempt to contact Hayhurst about the

outstanding warrant. 3/1/04 RT 35. Agent Campbell did not

advise Hayhurst of the outstanding arrest warrant until he

completed an extensive debriefing of Hayhurst regarding

petitioner’s real estate business. 3/1/04 \T 37-38.

The next day, a week after learning of the warrant, Agent

Campbell contacted Detective Kim and left him a voicemail

message advising him that he had spoken to Hayhurst and that

Hayhurst would “turn himself in shortly.” 3/1/04 RT 38.

Two weeks after the hospital interview, Hayhurst had still not

surrendered. He spoke with Agent Campbell and told

Campbell that he had been charged with extortion and

burglary and that his bail was $70,000. Hayhurst admitted to

Agent Campbell that he “probably will not turn himself in”

because he did not have the bail money. 3/1/04 RT 40. At

that time, Agent Campbell noted in his report that Hayhurst

was “still working on getting documents ready to provide” to

him. 3/1/04 RT 42. Notwithstanding Hayhurst’s fugitive

status, Agent Campbell made no attempt to assist local law

enforcement with Hayhurst’s arrest and did not stop

requesting or receiving information from Hayhurst. Jd.

Even though Agent Campbell admitted that he knew that

the arrest warrant related to the issue of petitioner’s stolen

real estate documents and that the IRS was investigating

petitioner’s real estate business based on information from

Hayhurst and Mir, he maintained at the suppression hearing

that he did not believe the documents he received from

Hayhurst and Mir were stolen. 3/1/04 RT 41. On July 6,

2000, Agent Campbell was still waiting for Hayhurst to

deliver additional documents to Agent Morris and himself.

3/1/04 RT 43. On July 26, 2000, over six months after the

theft of the records, Hayhurst provided Agent Campbell with

additional business records related to petitioner’s business,

including petitioner’s-seminar materials and copies of cashiers

checks. 3/1/04 RT 45.

In Agent Campbeil’s August 1, 2000 report, reference is

made to receiving more detailed information from Mir,

including information about petitioner’s immigration status,

and details about the purchase of his house. 3/1/04 RT 52;

ER 71-72. In a report dated August 28, 2000, Agent

Campbell acknowledged receiving bank deposit slips

belonging to petitioner together with other information likely

obtained from looking at documents. /d. Mir also faxed

Agent Campbell petitioner’s mortgage loan statement on

another property. /d. at 53; ER 74. These documents were

provided even though Mir did not reside with petitioner in

2000. Mir’s explanation was that he inadvertently took the

mortgage documents from petitioner when he moved out, but

that he had not discovered them until] he unpacked his boxes

many months later. 3/8/04 RT 28-29.

At the suppression hearing, Mir identified a 12-page

summary list that he turned over to the IRS on April 17, 2000

as a list provided to him to collect rent. 3/8/04 RT 22-23.

Mir also testified that it came into his possession in

September 1999. 3/8/04 RT 23; AOB Defense “B”, page 50;

ER 84. Mir identified a separate list with the names of

properties; he received the list from “Mr. Dawood” in early

2000. 3/8/04 RT 24; AOB Defense “B”, page 49; ER 83.

Mir stated that the rental receipt books came into his

possession when he started collecting rent in September 1999,

after it was transferred to him from Mirza Baig. 3/8/04 RT

8

25. Mir did not recall where the list of petitioner’s

corporations came from but believed he received it from “Mr.

~ Dawood”. 3/8/04 RT 26. Miur stated that he received

Vazquez’ 1099 form from Vazquez in April 2000. 3/8/04 RT

26-27. He claimed the deposit slips from the Beverly Hills

property were obtained by Mir when he deposited rental

income into petitioner’s accounts. Mir said he obtained the

deposit slips from Mirza Baig. 3/8/04 RT 27-28. Mir was not

aware of any financial documents listing the assets and

liabilities of petitioner, a document also provided to the IRS

by either Hayhurst or Mir. 3/8/04 RT 29-30.

Hayhurst was ultimately arrested for the December 21,

1999, theft. of petitioner’s business documents from

petitioner’s residence on Ladera Street. On January 17, 2001,

over defense objection, SA Olivo testified for the prosecution

at Hayhurst’s state trial. CR 72, Exhibit G to Government’s

Opposition to the Defendant’s Motion to Suppress, p. 66; ER

26. SA Olivo’s testimony that Hayhurst admitted taking

documents from petitioner was consistent with his testimony

at the suppression hearing. 2/26/04 RT 12-13; CR 72, Exhibit

G at pp. 71-72; ER 31-32. Hayhurst ultimately pled guilty to

a misdemeanor count of attempted extortion. CR 70, ER 22.

On February 28, 2006, the United States Court of Appeals

for the Ninth Circuit affirmed the district court's denial of

petitioner’s motion to suppress evidence from business

documents obtained by private parties and turned over to law

enforcement agents. App. A p. A-3.

REASONS FOR GRANTING THE WRIT

I. Certiorari Should Be Granted to Determine Whether

Government Agents’ Requests, Direction and

Encouragement of Searches by a Private Party of

Documents Stolen by the Private Party to Utilize in the

Agents’ Criminal Investigation and the Subsequent Use of

the Information by the Agents Converts the Private Party

into a Government Agent under the Fourth Amendment.

Petitioner Shetty respectfully prays that a Writ of

Certiorari issue to determine whether government agents’

requests, direction, and encouragement of a private party to

continue to search documents stolen by the private party to

utilize in the agents’ criminal investigation against petitioner

and the agents subsequent use and exploitation of information

procured from the stolen documents, tacitly approved

whatever measures the private party took to obtain the

documents thereby converting the private party into a

government agent for Fourth Amendment purposes. This

significant national question, regarding the application of the

Fourth Amendment to search and seizures by private parties

acting as instruments or agents of the government, has

resulted in a split between the Second, Seventh and Ninth

Circuits.” :

The Fourth Amendment protects against unreasonable

searches and seizures by Government officials and those

Y United States v. Sherwin, 539 F.2d 1, 6 (9" Cir.1976) (en

banc); United States v. Knoll, 16 F.3d 1313 (2™ Cir. 1994);

Knoll Associates, Inc. v. Federal Trade Commission, 397

F.2d 530 (7" Cir.1968).

10

private individuals acting as “instrument[s] or agent[s]” of the

Government. See U.S. Const. amend. IV; Coolidge v. New

Hampshire, 403 U.S. 443, 487, 91 S.Ct. 2022 (1971). The

Fourth Amendment limits searches conducted by the

government, not by a private party, unless the private party

acts as an “instrument or agent” of the government. Walter v.

United States, 447 U.S. 649, 656, 100 S. Ct. 2395 (1980). A

search by a private party not acting as an agent of the

government does not implicate the Fourth Amendment.

United States v. Jacobsen, 466 U.S. 109, 113, 104S.Ct. 1652,

1656 (1984). See also Burdeau v. McDowell, 256 U.S. 465,

475,41 S.Ct. 574 (1921). Whether a private party is acting as

an agent of the government depends on the degree of the

government’s participation in the private party’s activities.

Skinner v. Railway Labor Executives’ Ass'n, 489 U.S. 602,

614, 109 S.Ct. 1402, 1411 (1989) (the fact that the

government does not compel the private party to search does

not establish that the search is private for purposes of the

Fourth Amendment).

Petitioner maintains that United States Internal Revenue

(IRS) agents aided, acquiesced in and exploited the theft of

his personal business records from his residence, when,

following their theft, IRS Agents Campbell and Morris

encouraged Hayhurst and Mir to conduct several additional

searches of the stoien business records so that documentary

evidence and summaries could be provided to the

government. But for the government’s actions, the search of

the stolen records would not have continues

The record in this case clearly establiz. »s thatIRS Agents

Morris and Campbell continued to request ihat Hayhurst and

Mir provide them with information about petitioner’s

1]

business affairs long after the initial theft of the documents.

For instance, a July 6, 2000 memo prepared by Agent

Campbell states that Hayhurst “is still working on getting

_ documents ready to provide Special Agent Campbell.” 3/1/04

RT 42. This memo was prepared several weeks after the

government learned that Hayhurst was being sought by local

law enforcement for the theft of petitioner's documents.

Agent Campbell also details a number of documents provided

by Hayhurst and Mir on April 17, 2000, as well as in July and

August 2000 and through 2000, including blank deposit slips

for petitioner’s business, a mortgage loan statement for the La

Barca residence, additional rental receipt books, and two

binders containing seminar materials and cashier’s checks.

3/1/04 RT 44-49, 51-54.

During cross-examination at the suppression hearing,

Agent Campbell stated that from April 17, 2000 onward until

February 2002, he received documents periodically from Mir.

He also received documents from Hayhurst until on or about

July 26, 2000. 3/1/04 RT 67-68. Agent Mormis related that on

April 17, 2000 he was initially given a number of documents

by Hayhurst and Mir, including a receipt book, computer

generated documents and a couple of handwritten documents.

2/26/04 RT 29-30.

In Lustig v. United States, this Court noted that “a search

is a search by a federal official if he had a hand in it” and that

“[s]o long as he was in it before the object of the search was

completely accomplished,, he must be deemed to have

participated in it.” 338 U.S. 74, 78-79, 69 S.Ct. 1372, 1374,

93 L.Ed. 1819 (1949) (plurality opinion). Here, the object of

the search was to provide documents to the government. This

objective was not completed upon the burglary of petitioner’s

12

residence, but continued over time at the direction of the IRS.

The heart of the search was dependant on the government’s

request for additional materials it knew or should have known

were stolen.

Even after the agents learned that Hayhurst was going to

be arrested for the theft of petitioner’s documents, Hayhurst

and Mir were encouraged and requested to continue to search

for evidence of petitioner’s wrongdoing. Documents were

thereafter provided piecemeal by Hayhurst to the government.

The agents’ request for this information during a time that

they knew Hayhurst was being sought by law enforcement

constituted tacit approval by the agents for Hayhurst to obtain

the documents by any means possible and made the

government a participant in the illegal searches of petitioner’s

business records. The government thereafter utilized

documents and information it knew was stolen. These

documents should have been suppressed by the district court.

In affirming the district court’s denial of petitioner’s

motion to suppress evidence, the Ninth Circuit stated,

The government’s mere use of documents improperly

obtained by a private party does not offend the Fourth

Amendment. Indeed, this court has held that “once

a private search is completed, the subsequent

involvement of government agents does not

retroactively transform the original intrusion into a

government search.”’ United States v. Veatch, 674

F.2d 1217, 1222 (9" Cir.1982) (quotingUnited States

v. Sherwin, 539 F.2d 1, 6 (9" Cir.1976) (en banc)).

13

Here, the search of petitioner’s stolen documents

continued aiter the initial theft based on the IRS agent’s

request for additional documents from Hayhurst and Mir.

Therefore, despite the agents’ lack of knowledge prior to the

theft, the agents subsequent requests, direction and use of the

documents converted the private parties’ subsequent actions

into governmental action by the government agents’ tacit

approval of whatever measures the private parties took to

produce the information the agents wanted and expanded the

private search of petitioner’s documents in violation of the

Fourth Amendment. The Ninth Circuit's finding that the

private parties’ actions were not transformed by the agent’s

involvement into a government search conflicts with the

holdings of the Second and Seventh Circuits on similar facts.

In United States v. Knoll, 16 F.3d 1313 (2™ Cir. 1994), the

Second Circuit addressed very similar facts to those presented

in this case. In Knoll, private parties burglarized the office of

attorney-defendant Knoll and took boxes of documents. They

examined-some of the documents and took them to a

Assistant United States Attorney in hopes of obtaining

leniency. The AUSA was aware of the burglary but

nonetheless “tacitly suggested and condoned further searching

..., through the stolen documents.” /d. at 1319-1320. The

AUSA testified that he told the private party “he would have

to ‘get me more information,’ and ‘you’ve got to turn more

over. If there’s stuff out there, you’ve got to turn it over.’”

Id. at 1320. When the AUSA made thése statements to the

private party, he was aware there had been a burglary. As in

this case, the private party had made it “abundantly clear’ to

the AUSA “that there were a lot of documents that were

available to him.” Jd. at 1320.

14

The Knoll Court observed that it was not clear from the

record that all the files had necessarily been opened and

concluded that the search may not have been completed until

the private parties went through the stolen files upon the

government agents’ request to find the material to be turned

over to the FBI to be used against the defendants. Jd. Noting

that a private party acting as a government agent may not

expand upon a private search without runni~< afoul of the

Fourth Amendment under Walter v. United Staies, supra, the

Second Circuit found that the private parties may have been

acting as the agents of the government given that the AUSA

“directed their actions and tacitly approved of whatever

measures they took to produce information he wanted from

the contents of the files.” /d. The Knoll Court reasoned:

Although the applicable legal standard looks to

whether the person searching and seizing was an agent

of the government, see, e.g., United States v. Walther,

652 F.2d 788, 791 (9" Cir.1981), the standard does

not take a solely ex ante perspective. The Supreme

Court acknowledged in Lustig v. United States that ...

“{s]o long as [a federal official] was in it before the

object of the search was completely accomplished, he

must be deemed to have participated in it.” 338 U.S.

74, 78-79, 69 S.Ct. 1372, 1374, 93 L.Ed. 1819 (1949)

(plurality opinion)... .. the critical issue is the point

in time when the object of the search has been

completed. ... Although here the burglary may have

been accomplished, that is, the boxes of documents

had been stolen from Knoll’s office before the

government knew of the burglary, the search itself

may not have been complete until Devany, upon. ,

. ultimately AUSA Bruce’s request, went through all

15

the stolen files and listened to the tapes to find the

material to be turned over to the FBI to be used

against Knoll and Gleave. At some point in the

ongoing search, Ernle and Devany may have been

acting as agents of the government given that

AUSA Bruce directed their actions and tacitly

approved of whatever measures they took. to

produce information he wanted from the contents

of the files.

Knoll, supra, at 1320 [Emphasis added. |

Here, at the direction of IRS Agents Campbell and Morris,

Hayhurst and Mir went through the “tons” of stolen evidence,

evidence Hayhust admitted to FBI SA Olivo he had stolen.”

Agent Campbell and Agent Morris directed their actions and

tacitly approved of whatever measures they took to produce

the information, even if it meant that Agent Campbell would

assist Hayhurst in remaining a fugitive from justice.

The government’s encouragement and request for that

additional information and documents was an unlawful

expansion of the earlier private search and, therefore,

‘constituted an illegal warrantless search by the government,

condemned by the protection afforded individuals under the

Fourth Amendment against unreasonable government

2” Hayhurst’s admission to SA Olivo establishes that at some

time near the time of the Ladera burglary, he had “helped

himself” to petitioner’s documents. 2/26/04 RT 13. The theft

left him with “tons” of documents. /d.

16

searches and seizures. See Lustig v. United States, supra,

and United States v. Knoll, supra.

The agents also utilized the information gleaned by

Hayhurst and Mir from petitioner’s purloined files in

violation of petitioner’s rights under the Fourth Amendment

under the test used by the Seventh Circuit. In Knoll

Associates, Inc. v. Federal Trade Commission, 397 F.2d 530

(7 Cir. 1969), a Knoll Associates employee (Prosser) stole

corporation documents and provided them to the FTC. The

Seventh Circuit held:

The action of the Commission in utilizing the fruits of

the misconduct of Prosser violated rights of the

petitioner protected by the fourth amendment to the

federal constitution. The undisputed evidence shows

that-Prosser stole the documents for the purpose of

assisting the Commission counsel in the prosecution

of the proceeding then pending, and the records shows

that the Commission, by it use of the documents

knowingly gave its approval to Prosser’s unlawful act.

Id. at 533.

That is precisely what occurred in this case. The government

utilized the information provided by Hayhurst and his co-hort

and benefitted by their illegal activity.

Noting that “[t]he government may not do, through a

private individual, that which it is otherwise forbidden to do,”

the Seventh Circuit in United States v. Feffer, 831 F.2d 734,

736-737 (7" Cir. 1987) explained the significance of the facts

in Knoll Associates:

17

In Knoll Associates, Inc. v. Federal Trade

Commission, 397 F.2d 530 (7th Cir.1968)..., we

required the suppression of documents stolen by a

disgruntled employee and furnished to the FTC for its

use in a pending prosecution against the employer.

Significant there was the fact that the employee had

taken the documents for the purpose of furnishing

“ them to the FTC and the fact that the FTC had

knowingly approved of the employee's conduct by

accepting the documents. See also United States v.

Newton, 510 F.2d 1149 (7th Cir.1975) (absence of

legitimate reason to search luggage to determine

ownership where airline employee already knew

owner's identity, combined with government

involvement, made search governmental in nature).

Based on the facts found by the district court in Feffer, the

Seventh Circuit observed that “{a]lthough the IRS agents»

conduct came close to being improper,” it upheld the district

court finding that “it did not come close enough.” /d. at 739.

Feffer distinguished Knoll Associates by the fact that the

employee of the corporation who gave the documents to IRS

agents and then later provided additional documents, the later

events were not governmental because the employee’s motive

Or purpose in continuing the search was independent of

government involvement and the agent “never requested any

documents”-- it was not sufficient that the IRS agent “knew

or should have known that [the employee] would be

producing additional documents.” Jd. at 739-740.

In petitioner’s case, it is undisputed that the IRS agents

specifically asked for additional documents from Hayhurst

and Mir to be used in the agents’ investigation of petitioner

18

and the motive and purpose of Hayhurst and Mir in providing

the documents to the IRS agents was to further the criminal

investigation. Hayhurst indicated to Agent Morris that he

wanted a financial reward for providing the information

regarding petitioner to the IRS. 2/23/04 RT 34; 2/26/04 RT

26-28. Here, the IRS agents’ conduct in requesting, accepting

and using the additional documents convert Hayhurst and Mir

into instruments or agents of the government under the

standard employed by the Seventh Circuit in applying the

Fourth Amendment to searches and seizures by private

parties.

Thus, there were two separate violations of the Fourth

Amendment by the government. First, by directing and

participating in the receipt of additional information from the

stolen documents. This was an unlawful expansion of the

earlier private party search and, therefore, constitutes an

illegal warrantless search by the government. See Lustig v.

United States, supra, and United States y. Knoll, supra.

Second, by the government utilizing the fruits of the

information derived from the stolen documents. See Knoll

Associates, Inc. v. Federal Trade Commission, supra.

CONCLUSION

For the reasons set forth above, a Writ of Certiorari should

issue to review the decision of the United States Court of

Appeals for the Ninth Circuit. This Petition for Writ of

Certiorari presents important questions impacting searches

and seizures by private parties acting as instruments or agents

of the government, and a criminal defendant’s rights under the

Fourth Amendment to the Constitution. Certiorari should be

granted to resolve these important questions.

19

Dated: July 18, 2006

Respectfully submitted,

ROBERT J. WATERS

Counsel of Record

2115 Main Street

Santa Monica, CA 90405

(310) 399-3259

Counsel for Petitioner

SATISH SHETTY

20

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 05-5001 1

UNITED STATES OF AMERICA, Plaintiff-Appellee,

vs.

SATISH SHETTY, Defendant-Appellant.

D.C. No. CR-03- 00070-DOC

Appeal from the United States District Court for the Central

District of California, David O. Carter, District Judge,

Presiding.

Argued and Submitted Feb. 15, 2006.

Filed Feb. 28, 2006. az

Before: B. FLETCHER and CALLAHAN, Circuit Judges,

and ENGLAND, District Judge [FN*]

FN* The Honorable Morrison C. England, Jr., United

States District Judge for the Eastern District of

California, sitting by designation.

A-|!

__MEMORANDUM [FN**]

L

FN** This disposition is not appropriate for

publication and may not be cited to or by the courts of

this circuit except as providéd by 9th Cir. R. 36-3.

Following his conditional guilty plea to one count of

_bank fraud, in violation of 18 U.S.C. § 1344, and one count

of money laundering, in violation of 18 U.S.C. §

1956(a)(1)(A)(), the appellant challenges the district court’s

denial of his motion to suppress evidence ‘rom certain

business documents obtained by private parties and turned

over to law enforcement agents. [FN1] He specifically

contends that the private parties stole the documents and their

actions constituted a governmental search in violation of the

Fourth Amendment.

FN1. We do not give a full recitation of the facts

because the parties are already familiar with them.

We review de novo the district court’s denial of the

appellant’s suppression motion. United States v. Crawford,

372 F.3d 1048, 1053 (9th Cir.2004) (en banc). The district

court’s factual findings underlying the denial of the motion

are reviewed for clear error. United States v. Bynum, 362

F.3d 574, 578 (9th Cir.2004). The appellant has the burden of

establishing government involvement in a private search.

United States v. Snowadzki, 723 F.2d 1427, 1429 (9th

Cir. 1984).

Here, even if we were to assume that the documents

were stolen, the appellant has failed to show that the

government acquiesced in the alleged theft. There is no

evidence in the record that the government was in any way _

A-2

involved with or had prior knowledge of any search

conducted by the private parties. The government’s mere use

of documents improperly obtained by a private party does not

offend the Fourth Amendment. Indeed, this court has held

that “ ‘once a private search is completed, the subsequent

involvement of government agents does not retroactively

transform the original intrusion into a government search.’ “

United States v. Veatch, 674 F.2d 1217, 1222 (9th Cir. 1982)

(quoting United States v. Sherwin, 539 F.2d 1, 6 (9th

Cir.1976) (en banc)). | Accordingly, the appellant’s

conviction, sentence, and the denial of his suppression motion

are AFFIRMED.

A-3

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 05-5001 1

UNITED STATES OF AMERICA, Plaintiff-Appellee,

a

SATISH SHETTY, Defendant-Appellant.

D.C. No. CR-03- 00070-DOC

ORDER

Filed April 20, 2006

Before: B. FLETCHER and CALLAHAN, Circuit Judges,

and ENGLAND, District Judge [FN*]

FN* The Honorable Morrison C. England, Jr., United

States District Judge for the Eastern District of

California, sitting by designation.

The appellant’s petition for panel rehearing and

suggestion for rehearing en banc are hereby DENIED.

SO ORDERED.

APPENDIX C

United States Constitution, Fourth Amendment

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 Warrant shall issue, but

upon probable cause, supported by Oath or affirmation, and

particularly describing the place to be searched and the

persons or things to be seized.

C-]