The opinion of the court was delivered by: Michael M. Mihm United States District Judge
This matter is now before the Court on Defendants' Motion to Suppress and Subpart A of Winters' Motion to Dismiss the Indictment With Prejudice. For the reasons set forth below, the Motion to Suppress [#54] is DENIED, and Subpart A of Winters' Motion to Dismiss [#47], which is essentially duplicative of the Motion to Suppress, is also DENIED.
During the late 1990's and into 2000, IRS agents in the Northern District of Illinois were conducting an investigation of Aegis Financial Group ("Aegis"), a company based in Palos Hills, Illinois, with respect to its role in marketing a system of trusts used in an alleged conspiracy to defraud the IRS of millions of dollars in income taxes. The investigation of Aegis led IRS agents to the Central District of Illinois and the offices of Worldwide Financial Services ("WFS"). This criminal prosecution follows the search of WFS' business premises at 913 17th Street, Charleston, Illinois, on March 31, 2000.
At approximately 10:30-10:45 a.m. that morning, IRS agents entered WFS' office building to execute the federal search warrant. Upon entering the office through two unlocked doors, agents announced their presence and found Defendants Ken Tylman ("Tylman"), Brent Winters ("Winters"), and Debra Hills ("Hills") in a conference room; Harry Woolen ("Woolen") was also present in the conference room. The agents proceeded to secure the premises, and in the process noted that the diagram that they had received from the undercover agent was no longer accurate because of remodeling of the general area into separate offices and several common areas. That being said, despite Defendants arguments to the contrary, all indications at the time that the agents entered the building were that the area represented one integrated business. None of the offices had any signage, labels, or other indicia that they constituted separate businesses. The only business sign at the building was a sign for WFS that appeared in an exterior window near the front door of the building. There was also evidence of common computer networking and use of the common areas.
After receiving a copy of the warrant, Tylman and Winters objected that there was no list of items to be seized. Agent Bernard Coleman ("Coleman"), who was in charge of the search, consulted supervisory agents in Chicago and was advised that he should obtain a new warrant before proceeding with the search. While a second warrant was obtained, the agents maintained control of the premises to preserve the status quo and prevent the destruction of evidence. The agents videotaped and diagramed the offices, traced computer cables, and labeled file cabinets while they were waiting, but there is no persuasive evidence indicating that they conducted a search in any meaningful way during that time. Defendants were told that they were free to leave, and both Hills and Woolen did so. As evidenced by the testimony of the agents and a videotape made that day, Defendants were also free to move around the offices, albeit with supervision by agents scattered throughout the premises.
At approximately 2:43 p.m. that afternoon, the second search warrant arrived. The second warrant contained an attached list of items to be seized. However, Tylman was quick to point out that the attached list was the wrong list and did not apply to his property. Rather, the list identified items to be seized in a search of Aegis offices located more than 100 miles away. After again consulting with a supervisory agent, Coleman returned to the courthouse for yet another warrant while the agents continued to secure the premises.
The third warrant arrived around 5:35 p.m. with the proper list of items to be seized attached to the warrant. Agent Don Staggs ("Staggs") handed a copy of the warrant and list to Winters, and the agents began conducting the search. The items seized were listed in an inventory, a copy of which was left with Tylman and Winters. As there was insufficient time to image the computer hard drives on site, agents seized the computers for examination off site. With the exception of one older Gateway computer, the computers were imaged and returned within a few business days.
Tylman, Hills, Woolen, and James McNutt ("McNutt"), another individual renting space in the WFS building, subsequently filed a motion seeking the return of their property and the suppression of evidence pursuant to Federal Rule of Criminal Procedure 41(e). (Case Nos. 00-U-13, 00-U-14, and 00-U-15) Judge Michael McCuskey ordered the Government to return copies of the seized documents and denied other requested relief. Unsatisfied with this outcome, the petitioners appealed. After acknowledging that no indictment had yet been filed, the Court of Appeals found that any attempt to seek suppression of evidence was premature and affirmed the ruling with respect to the return of copies. In re: Search of the Office of Ken Tylman, Worldwide Financial Services, 913 17th Street, Charleston, IL 61920, 245 F.3d 978, 981 (7th Cir. 2001)
On April 6, 2006, an Indictment issued against Tylman, Winters, and Hills charging all three of them with conspiracy to defraud the IRS, as well as charging Hills and Winters with filing false tax returns. Superceding Indictments issued on August 3, 2006, and June 6, 2007. After initially presiding in this case, Judge McCuskey recused himself, and the matter was reassigned to this Court.
Defendants filed the present motions seeking to suppress the evidence that was obtained during the March 31, 2000, search. The Government requested that the Court adopt previous findings of fact made by Judge McCuskey and the Court of Appeals. This request was denied based on the Court's determination that the parties were entitled to a de novo examination. Following what amounts to three days of evidentiary hearings on this issue, this Order follows.
In a Fourth Amendment claim, the decision of whether a search or seizure is reasonable is intensely fact driven and should be determined based on the totality of the circumstances. See South Dakota v. Opperman, 428 U.S. 364, 373 (1976); U.S. v. Griffin, 729 F.2d 475, 485 (7th Cir. 1984). If a search or seizure is found to be in violation of the Fourth Amendment, the evidence obtained from the illegal search or seizure may be properly suppressed via the exclusionary rule. See Arizona v. Evans, 514 U.S. 1, 11 (1995); U.S. v. Duguay, 93 F.3d 346, 354 (7th Cir. 1996). However, the suppression of evidence is an extraordinary remedy that is to be used as a last resort to efficaciously serve its remedial purpose. United States v. Calandra, 414 U.S. 338, 348 (1974).
A. Errors in Search Warrant Files
Defendants spent a great deal of time arguing that the three official search warrant files are not in the proper order, suggesting that there is some sinister reason or Government misconduct behind the problem. After reviewing the files themselves and hearing testimony on this question, there is no doubt that the files are not in the proper order. While resolving this issue does require some assessment of credibility, the Court notes that it would be nonsensical for the Government to have deliberately shuffled the files, as it would only serve to further complicate an already complex case and breed the kind of acrimonious allegations that the Court is now asked to resolve.
The files are not kept by the Government. Rather, the U.S. Clerk's Office is responsible for keeping and maintaining the official court file. In this case, the search warrant files were kept and handled by the clerk's offices in both the district court and the Court of Appeals. Unfortunately, it is not uncommon for documents to get out of order in the process of preparing the record for appeal, reviewing the record, making copies requested by court staff or counsel, or returning the record to the court files following an appeal. Based on the evidence presented, the only reasonable conclusion is that this is precisely what happened to the files in this case. Any misfiling resulting therefrom was harmless and inadvertent.
B. Appearance of White Out on Attachment B
Defendants suggest some impropriety from the fact that there is white out on the heading of Attachment B appended to the third search warrant and that the font of the letter "B" on that attachment appears different from the letter "B" on Attachment B to the second search warrant. With all due respect, the Court finds this issue to be a red herring that has no bearing on the real question of whether there was in fact an Attachment B appended to the third search warrant. The agents were compiling different attachments coming from different sources that day, and the fact that one attachment had to be amended to comport with the other documents being prepared is simply a non-issue.
C. Knock and Announce Violation
Defendants argue at length that suppression is warranted because the agents violated the "knock and announce" requirement and had not obtained a "no knock" warrant. However, this is not a "no knock" situation. The clear and uncontroverted evidence of record is that the agents entered a place of business through an unlocked door during normal business hours. Under these circumstances, the Court finds that although Agent Coleman did announce their presence upon entry, the agents had no duty to knock and announce before entering. Defendants have not cited and the Court is otherwise unaware of any binding precedent directing a different result. Moreover, even assuming arguendo that a knock and announce violation occurred, suppression is not justified pursuant to Hudson v. Michigan, 126 S.Ct. 2159, 2168 (2006) and United States v. Langford, 314 F.3d 892, 894-95 (7th Cir. 2002).
D. Search/Seizure Under First or Second Warrants
The record reveals that no meaningful search was conducted under either the first or second warrants. See also, In re: Search of the Office of Ken Tylman, Worldwide Financial Services, 913 17th Street, Charleston, IL 61920, 245 F.3d 978, 979 (7th Cir. 2001) (noting that videotaping, diagramming, and labeling file cabinets did not constitute a search.) Accordingly, it necessarily follows that no items were seized pursuant to a search that did not occur. This was properly reflected on the returns for the first and second warrants, and the Court finds no material issue here.
In support of their contention that the agents impermissibly searched their computer systems prior to the arrival of the third warrant, Defendants point to portions of the videotape made that day. Review of the tape revealed that earlier in the day, the computer screens appeared to be dark, while later in the day but prior to the arrival of the third warrant, the screens were lit with either a log-in screen or desktop icons visible. From this, Defendants conclude that the agents must have impermissibly searched some of the computers.
Initially, the Court notes that the only computers that showed anything other than a blank screen belonged to Hills and McNutt. As McNutt is not a party to this criminal proceeding, Defendants lack standing to make any challenge with respect to his computer. Moreover, the fact that Hills' computer may have displayed a log-in screen does not in any way indicate that her computer was searched. To the contrary, it would suggest that it was not possible to have obtained any information from her computer at that time because it was password protected. Agent Stephen Tinsley ("Tinsley"), the agent charged with obtaining evidence from the computers during this search, testified that the fact that a monitor appeared to be black was not indicative of whether the computer was on or off at the time, as it could be indicative of a blank screen saver. (6/26/07 Transcript at 109) He also stated that he never turned on a computer, touched a space bar or anything to any of the computers prior to the arrival of the ...