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Sky Capital Franks Decision April 30 2010

Sky Capital Franks Decision April 30 2010

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Published by 92589258
Ruling From Judge Paul Crotty as to Sky Capital's request to suppress information gained during search
Ruling From Judge Paul Crotty as to Sky Capital's request to suppress information gained during search

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Published by: 92589258 on Mar 12, 2012
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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x:UNITED STATES OF AMERICA ::: 09 Cr. 662 (PAC):- against - : MEMORANDUM: OPINION & ORDER ROSS MANDELL, STEPHEN SHEA, :ADAM HARRINGTON a/ka/ “Adam Rukdeschel,” :ARN WILSON, ROBERT GRABOWSKI and :MICHAEL PASSARO ::Defendants. :- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -xHONORABLE PAUL A. CROTTY, United States District Judge:Defendants Ross Mandell (“Mandell”), Stephen Shea, Adam Harrington, ArnWilson, Robert Grabowski and Michael Passaro are charged with one count of conspiracy to commit securities fraud, mail fraud and wire fraud and one substantivecount of securities fraud. The Indictment alleges that, from 1998 through 2006, Mandelland his co-defendants participated in a scheme to defraud investors by soliciting fundsunder false pretenses, manipulating the market for certain securities, and bymisappropriating and failing to use investors’ funds as promised. The Defendants, alongwith others under their control, allegedly used “boiler room” sales tactics to bilk investorsout of millions of dollars.Mandell moves to suppress all evidence seized pursuant to two search warrantsexecuted in November, 2006, at the offices of Sky Capital Holdings Ltd. (“SKH”), SkyCapital LLC (“Sky LLC”) and Sky Capital Enterprises (“SKE”) (collectively, “SkyCapital”). The first warrant, which was executed on or about November 6, 2006,authorized the search of Sky Capital’s offices at 110 Wall Street in New York, New York 
USDC SDNYDOCUMENTELECTRONICALLY FILEDDOC #: _________________ DATE FILED: April 30, 2010
Case 1:09-cr-00662-PAC Document 67 Filed 04/30/2010 Page 1 of 28
 
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(the “Sky Offices”). The second warrant, which was executed on or about November 9,2006, authorized the search of a basement storage area at 110 Wall Street. The searchwarrants were issued based on an affidavit (the “Affidavit”) submitted on November 2,2006 by Special Agent Kurt Dengler (“Dengler”) of the Federal Bureau of Investigations(“FBI”). Mandell contends Dengler omitted material information from his Affidavit inreckless disregard for the truth and seeks suppression of the two searches under Franks v.Delaware, 438 U.S. 154 (1978). In the alternative, Mandell asks the Court to hold aFranks hearing to determine whether suppression is required.A Franks hearing is required when the defendant makes a “substantial preliminaryshowing” that a false statement was made in the search warrant affidavit either “knowingly and intentionally” or with “reckless disregard for the truth,” and that “theallegedly false statement is necessary to the finding of probable cause.” Franks, 438 U.S.at 155-56. Upon review of Mandell’s motion papers and memoranda of law, and after oral argument, the Court finds that Mandell has failed to make such a “substantial preliminary showing” and the motion to suppress and for a Franks hearing is DENIED.Mandell also moves for a bill of particulars under Rule 7(f) of the Federal Rulesof Criminal Procedure. Among other things, he seeks to compel the Government to particularize the allegations in the Indictment regarding misrepresentations allegedlymade to investors and to identify the allegedly defrauded investors. The level of detailsought demonstrates that the request is nothing more than an “ill-disguised attempt[] atgeneral pretrial discovery.” United States v. Torres, 901 F.2d 205, 234 (2d Cir. 1990).
Case 1:09-cr-00662-PAC Document 67 Filed 04/30/2010 Page 2 of 28
 
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The indictment adequately apprises Mandell of the charges against him and his motionfor a bill of particulars is DENIED.
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I. Validity of the Warrants
There is a “presumption of validity with respect to the affidavit supporting asearch warrant.” Franks, 438 U.S. at 171; see also United States v. Awadallah, 349 F.3d42, 66 (2d Cir. 2003). In certain limited circumstances, however, “a defendant maychallenge the truthfulness of factual statements made in the affidavit, and therebyundermine the validity of the resulting search or seizure.” United States v. Martin, 426F.3d 68, 73 (2d Cir. 2005) (quoting Awadallah, 349 F.3d at 64.) “One such circumstanceis where the affidavit in support of the search warrant is alleged to contain deliberately or recklessly false or misleading information.” United States v. Canfield, 212 F3d 713, 717(2d Cir. 2000).Hearings under Franks are not freely granted. The defendant “must make a‘substantial preliminary showing’ that: (1) the claimed inaccuracies or omissions [in theaffidavit] are the result of the affiant’s deliberate falsehood or reckless disregard for thetruth; and (2) the alleged falsehoods or omissions were necessary to the judge’s probablecause finding.” United States v. Salameh, 152 F.3d 88, 113 (2d Cir. 1998) (citing UnitedStates v. Levasseur, 816 F.2d 37, 43 (2d Cir. 1987)). In Franks the Court explained that,[t]o mandate an evidentiary hearing, the challenger’s attack must be morethan conclusory and must be supported by more than a mere desire tocross-examine. There must be allegations of deliberate falsehood or of reckless disregard for the truth, and those allegations must accompanied by an offer of proof. They should point out specifically the portion of thewarrant affidavit that is claimed to be false; and they should be
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Mandell also moves for leave to supplement his motions and to file additional motions based on hisreceipt of additional discovery materials and his “further review of the voluminous materials already provided.” (Notice of Motion ¶ C.) Mandell further requests leave to join any motions made by his co-defendants. (Id.) These requests are premature and they are DENIED.
Case 1:09-cr-00662-PAC Document 67 Filed 04/30/2010 Page 3 of 28

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