W.D. N.Y.: Tax preparation business satisfied “business permeated by fraud exception”

Broad search warrant in a tax preparation fraud case did not violate the particularity requirement. While the list was significantly long and covered nearly every record in the business, there was no “catch-all” phrase at the end that would make it overbroad under circuit case law. United States v. Smith, 2007 U.S. Dist. LEXIS 52377 (W.D. N.Y. July 19, 2007):

The Second Circuit, in upholding broadly worded categories of items available for seizure, has expressly noted that “the language of the warrant is to be construed in light of an illustrative list of seizable items.” United States v. Riley, 906 F.2d 841, 844 (2d Cir. 1990) (citations omitted). In upholding the validity of the warrant in Riley, the Court observed:

[T]he warrant supplied sufficient examples of the type of records that could be seized – bank records, business records, and safe deposit box records. No doubt the description, even with illustrations, did not eliminate all discretion of the officers executing the warrant, as might have occurred, for example, if the warrant authorized seizure of the records of defendant’s account at a named bank. But the particularity requirement is not so exacting. Once a category of seizable papers has been adequately described, with the description delineated in part by an illustrative list of seizable items, the Fourth Amendment is not violated because the officers executing the warrant must exercise some minimal judgment as to whether a particular document falls within the described category.

It is true that a warrant authorizing seizure of records of criminal activity permits officers to examine many papers in a suspect’s possession to determine if they are within the described category. But allowing some latitude in this regard simply recognizes the reality that few people keep documents of their criminal transactions in a folder marked “drug records.”
United States v. Riley, 906 F.2d at 844-845. Riley recognizes that the realities of a complex criminal investigation often necessitate that law enforcement officials involved in such investigations be permitted some latitude in fulfilling the particularity requirement of the Fourth Amendment.

Alternatively, the warrant was valid under the “business permeated by fraud exception” for a wholesale seizure of records:

Even if it were assumed arguendo that the search warrant in this case constituted a “general” or so-called “all-records” warrant, it would still be valid under the facts and circumstances present here. Although the particularity requirement of the Fourth Amendment creates a general presumption against “general” or “all-records” warrants, courts, including the Second Circuit, have recognized an exception where there is probable cause to believe that criminal activity permeates the business to be searched. [citations omitted]

In this case, the Court finds that the search warrant application provided probable cause to believe that the defendant’s business enterprises were permeated by fraud. Defendant used a variety of similar sounding names for his business premises, including The Auto Store, American Direct Services, 24 Hour Towing and Auto, ABC Services, etc. The business, as described by former employees and customers, was a combination of a used car sales operation and an income tax preparation business, as well as providing insurance for the vehicles. Defendant used an employee’s name on car titles, registration forms, and the business certificate. Defendant had also been overheard using a false name on the telephone in the business.

The manner in which defendant sold cars also suggests pervasive illegality. The customers signed documents in blank or were not allowed to see what they signed. Nor did they get copies of the documents they signed. Customers also complained that the defendant refused to provide them with receipts for any payments they made.