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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2006

## Text

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-]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_1214%3A1. Public record. Not legal advice.