For many decades, federal law enforcement has used electronic surveillance, including wiretaps, to obtain incriminating evidence for criminal investigations of mobsters and drug traffickers. From a prosecutor’s viewpoint, there is no better evidence in a criminal case than being able to play the defendant’s own incriminating words for the
jury.

John Gotti learned this lesson the hard way after being acquitted in several jury trials. The FBI finally caught the “Teflon Don” by bugging an apartment above a social club that Gotti frequented. With the FBI hearing every word, Gotti talked openly with his business associates about his criminal activities. The prosecution played numerous recordings from the bugs at trial. Gotti was finally convicted based largely upon his own words.1

Wall Street executives have been largely immune from the specter of wiretaps on business telephones and corporate board meetings. Times have changed. To avoid a paper trail, executives are more circumspect in what they put down on paper and what they type in e-mails.2 Now, federal law enforcement is using the power of Title III3 wire interception and electronic surveillance to go after oral communications of targets in
white collar investigations.

The use of electronic surveillance evidence to arrest billionaire Raj Rajaratnam4 of the hedge fund Galleon Group on insider trading charges has many business executives thinking twice about what they say on the telephone. Media reports and legal experts noted that the use of wiretaps to collect evidence in a white collar case was dramatic change in investigation techniques.5

Distinguishing between wiretaps and other types of electronic surveillance

There is some misconception as to what constitutes a wiretap under Title III. By statute, wire communication “means any aural transfer made in whole or in part through the use of facilities for the transmission of communications by the aid of wire, cable, or other like connection between the point of origin and the point of reception ... furnished or operated by any person engaged in providing or operating such facilities for the transmission of interstate or foreign communication or communications affecting interstate or foreign commerce.”6 Contrary to television and movie depictions, consensual bodywire or consensually monitored telephonic recordings7 by a confidential informant or a ooperating witness are not wiretaps. Pen Registers and Trap and Trace orders8 are also not wiretaps.

The federal statute governing the recording of telephone conversations is 18 U.S.C. 2511(2)(d). This statute states, in relevant part:

It shall not be unlawful under this chapter for a person not acting under color of law to intercept a wire, oral, or electronic communication where such person is a party to the communication or where one of the parties to the communication has given prior consent to such interception unless such communication is intercepted for the purpose of committing any criminal or tortious act in violation of the Constitution or laws of the United States or of any State.

Telephone conversations fall within the ambit of “wire communications.” Ali v. Douglas Cable Communications, 929 F. Supp. 1362, 1375-76 (D. Kan. 1996) (“A telephone conversation is a wire conversation.”) (internal quotation omitted). Thus, federal law only requires one party to a telephone conversation to consent to the recording. See Roberts v. Americable Intern. Inc., 883 F. Supp. 499, 503 (E.D. Cal. 1995) (stating that under 28 U.S.C. § 2511(2)(d), “the interception of oralcommunication is not unlawful ... where a party to the conversation is either the one who has intercepted the conversation or who has consented to the interception, and the interception is not for the purpose of committing any criminal or tortious act”).

A party is exempt from the wiretap prohibitions of Title III where at least
one of the parties to the telephone conversation has consented to the interception. Williams v. Poulos, 11 F.3d 271, 281 (1st Cir.1993); Watkins v. L.M. Berry & Co., 704 F.2d 577, 580-81 (11th Cir.1983). While consent under Title III need not be explicit and may be implied, Williams, 11 F.3d at 281, it is “not to be cavalierly implied”, Watkins, 704 F.3d at 581. Implied consent is consent in fact, which is inferred from surrounding
circumstances indicating that the party knowingly agreed to the recording. Id.

Aside from law enforcement obtaining a court order to listen to phone conversations, federal law allows a business to record telephone calls in the “ordinary course of business” if criteria is followed for the recordings. See Adams v. City of Battle Creek, 250 F.3d 980, 984 (6th Cir.)(“‘Ordinary course of business’ is not defined in the statute, but it generally requires that the use be (1) for a legitimate business purpose, (2) routine and (3) with notice.”), pet. for reh’g en banc denied, (6th Cir. 2001).

Title III Process and Requirements

Unlike a grand jury subpoena or search warrant, a wiretap involves a substantial amount of work on law enforcement’s behalf before it can be authorized.

In a nutshell, a Title III requires a showing of probable cause, necessity, and exhaustion of traditional investigative techniques. The wiretap tatutes
(18 U.S.C. § 2510 et seq.) have explicit and detailed requirements in order to establish probable cause9 exists for a particular telephone to be tapped. Thelaw enforcement agent must provide a lengthy affidavit that explains the factual basis for the belief that a particular telephone (the “target telephone”) is being utilized for criminal activity. The affidavit becomes the basis for an application by the assistant U.S. attorney
(AUSA) who will review, edit, and rewrite the document. After the AUSA approves the affidavit, he or she must then submit the draft affidavit and Title III application to the Department of Justice (DOJ) in Washington, D.C., for review and approval. Only after approval by the DOJ can the AUSA present the Title III application and affidavit to a federal judge for review and authorization for 30 days of wire interception on the target telephone.

Showing Necessity for a Wiretap
The government must show the necessity for the wiretap by proving it has exhausted traditional investigative techniques in the process.10 Traditional tools used by law enforcement include grand jury subpoenas, confidential informants, search warrants, pen registers and trap & trace devices, trash searches, etc. The government must show how these tools have been used and why they have failed to uncover the criminal conduct. When the government fails to show necessity, the wiretap evidence may be suppressed.11 In the Galleon investigation, the defense filed motions to suppress the wiretaps based on the allegations that necessity was not established because the government had evidence from other testimony and documents produced pursuant to subpoenas from the SEC.11

DOJ Approval Before Taking a Wiretap Application to the Court
The DOJ’s Office of Enforcement Operations (OEO) must review and approve the wiretap application and affidavit before the prosecutor ever presents the documents to a federal district court judge to review. OEO acts as a gatekeeper for Title III applications. Its attorneys scrutinize wiretap affidavits to determine whether or not necessity has been established for interception of the target telephone. The affidavit is often rewritten several times if it appears that the law enforcement agents have not
articulated all the traditional investigative efforts that have been attempted in the case.

Once the OEO approves the affidavit, a DOJ associate attorney general provides authorization for the AUSA to present the Title III application and affidavit to the court for review.12 Upon approval, the AUSA and agents have the responsibility of adhering to minimization requirements. Even with the wiretap order, the agents are only permitted to listen to pertinent telephone calls that are associated with the criminal
offenses under investigation. Agents who fail to minimize (i.e., stop listening) during nonpertinent phone calls run the risk that the wiretap evidence may be later suppressed. The government also is required to submit periodic reports (every 10 days) to the court that provide the number of calls that were intercepted and a summary of information on pertinent calls.

After the 30-day period of interception ends (and assuming there is no extension granted by the court), the government must promptly seal the tapes.13 Within a reasonable time but not later than 90 days after interception, the government must send out notices of interception to anyone who was intercepted on the wiretap.14 Prosecutors will often seek delays in sending out the notices when there is an ongoing
investigation. Eventually, the notices go out and the interceptees receive official word that the government was listening to their conversations on the target telephone.

Conclusion
DOJ is now aggressively using wiretaps and electronic surveillance in federal white collar investigations. The recent use of these tools to obtain evidence in white collar investigations should place executives on notice that they need to be concerned who may be listening to conversations on telephone calls when criminal activity is suspected.

Craig S. Denney is counsel at Downey Brand LLP, board certified in criminal law by the National Board of Trial Advocacy. He is a former federal prosecutor who represents corporate and individual clients in white collar criminal defense and government egulatory matters in federal and state courts in Nevada and California.

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Endnotes
1   Selwyn Raab, Five Families (St. Martin’s Press, New York, 2006).

2    See United States v. Frank Quattrone, (S.D.N.Y.), federal indictment charged executive with obstruction of justice based on e-mail message to coworkers during federal investigation regarding the firm’s document destruction policy, p. 27, ¶39 (“We strongly suggest that before you leave for the holidays, you should catch up on filing cleaning.”).

3   “Title III” gets its name from the Omnibus Crime Control and Safe Streets Act of 1968. Wiretaps are now covered in 18 U.S.C. §§ 2510–2522.

4   Glovin, David, David Scheer, and Bob Van Voris, Galleon Case Ushers in Wiretaps for Financial Crimes, Bloomberg (Oct. 17, 2009).

5   Kiviat, Barbara, Arrests Open a Window on Hedge-Fund Culture, Time (Oct. 21, 2009) (Stetson University law professor Ellen Podgor was quoted in the article stating: “This is a monumental step for the government ... This is not the typical way you do a white-collar case.”).

6  18 U.S.C 2510(1)

7   Bodywires refer to placement of a concealed recording device on an informant for a face-to-face meeting with a target. No court authorization is needed for this type of investigative work in federal investigations. Consensual telephone monitoring involves the informant making a recorded call in the presence of the agent who records the audio conversation. No court authorization needed for this investigative technique
in federal cases.

8   Pen Registers refer to a device that records the phone numbers that a target telephone calls. Trap and Trace refers to a device that records the phone numbers that call the target telephone. These tools only record the phone numbers not the conversations on the calls. Pen Registers and Trap and Trace devices are used to develop evidence to seek a wiretap on the target telephone.

9    The probable cause for a wiretap is more stringent that for a standard search warrant. The evidence that the target telephone is being used for criminal activity must be clearly shown in the affidavit. Generally, as a rule of thumb, DOJ wants a “dirty call” on the target telephone within 21 days of seeking the wiretap approval. See, e.g., DOJ Manual on Federal Narcotics Prosecutions. This requires the investigators to provide a lengthy affidavit with all facts to establish probable cause.

10  “Necessity” in Title III refers to the government’s showing that the goal of the investigation could not be obtained through normal investigative techniques. See 18 U.S.C. § 2518(3)(c)(3)(“Upon such application the judge may enter an ex parte order ... authorizing ... interception of ... electronic communications ... if the judge determines on the basis of the facts submitted by the applicant that ... normal investigative procedures have been tried and have failed or reasonably appear to be unlikely to succeed if tried or to be too dangerous.”); See Kalar, Steven and Josh Cohen, Uncle Sam Is On The Line: A Title III (Wiretap) Primer. (Aug. 18-20, 2005).

11  Defense counsel should scrutinize the Title III affidavit’s necessity section which may sometimes contain boilerplate necessity language with short shrift of facts showing the investigative techniques were pursued and failed.

12  Kouwe, Zachery, Galleon Chief Accuses S.E.C. of Violations, New York Times (Nov. 25, 2009).

13  Title III applications by statute must be approved by federal judges. (18 U.S.C. §§ 2518 and 3127). District court judges review wiretap applications. Magistrates handle applications for pen registers and trap and trace devices which are typically implemented on the target telephone in the investigation in order to develop probable
cause and necessity for the Title III.

14  The reference to tapes is antiquated since the recordings are now digitally recorded on a CD. 1518 U.S.C. § 2518(8)(d).