Wiretaps and white collar crime

March 30, 2013

Wiretaps and white collar crime

Article provided by Law Offices of John D. Kirby, A P.C.
Visit us at http://www.johnkirbylaw.com

Wiretaps are most often used in narcotics and organized crime investigations, where tight-knit, sophisticated individuals make it difficult to gather evidence by other means. However, the federal government is using wiretaps more frequently in insider trading and other securities fraud investigations. The concern is that courts are authorizing wiretaps in white-collar investigations simply because the government claims they are a "necessity," when that is often not the case.

A case in point

In May 2011, a federal jury convicted billionaire investor Raj Rajaratnam of 14 counts of fraud and conspiracy for making over $50 million in illegal securities trading. A federal judge sentenced Mr. Rajaratnam to 11 years in prison and fined him $10 million. Much of the damning evidence against Mr. Rajaratnam was secretly recorded phone conversations authorized under the federal Wiretap Act. The conversations included discussions of insider information about stock trades.

Mr. Rajaratnam is appealing his conviction in the U.S. Second Circuit Court of Appeals, claiming that the government had insufficient grounds to obtain a wiretap authorization. He argues that because the wiretap was illegally obtained, all of the wiretap evidence against him should be suppressed. Because the wiretap evidence was critical to Mr. Rajaratnam's conviction, suppression would likely result in an acquittal.

The authority to wiretap

Title III of the Omnibus Crime Control and Safe Streets Act of 1968, or Title III, establishes authority to conduct wiretap investigations. To obtain a wiretap, law enforcement must establish probable cause that a suspect or suspects are using a telephone to discuss actions relating to a crime or crimes that are enumerated in the Title III statute. With probable cause, law enforcement must also show that interception of the phone line is essential to the investigation.

Title III requires the government to submit "a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear to be unlikely to succeed if tried or to be too dangerous." As the U.S. Supreme Court stated in U.S. v. Kahn, the idea is to ensure that "wiretapping is not resorted to in situations where traditional investigative techniques would suffice to expose the crime."

Will Rajaratnam's conviction stand?

The overarching issue in Mr. Rajaratnam's and other white-collar cases is whether wiretaps are a "necessity" as they often are in narcotics and organized crime cases. White-collar cases are often investigated criminally and for civil regulatory purposes by the Securities and Exchange Commission or other government agencies. The additional investigation provides alternative means of obtaining evidence and until it is finished, all other options cannot be said to have been exhausted.

In Mr. Rajaratnam's case, the SEC was simultaneously investigating him for insider trading, but that fact was quickly glossed over in the government's wiretap application. Mr. Rajaratnam's appeal claims that the full information regarding the SEC investigation should have been presented to the court to show that not all reasonably necessary means had been attempted.

Many are concerned that as wiretaps are more frequently used in white-collar investigations, the courts are not holding the government's applications to a high enough standard. The danger is that the privacy rights of many innocent people are being violated at this moment and will be in the future unless the courts crack down. Unless defendants stand up and fight the government's attempts to violate privacy rights, it will continue unchecked.

Not everyone's case is as dramatic or newsworthy as Mr. Rajaratnam's. However, if you feel that your constitutional rights have been violated in the course of a criminal investigation against you, an experienced defense attorney can provide help craft a case centered on your rights, your best interests and your future.