PREMIUM LEGAL RESOURCES
ASK A LAWYER
By Andrew Grosso, J.D.
Not all search warrants are equal. Using a warrant to locate and seize a
single piece of evidence, such as a firearm or crack cocaine, may be a
fairly simple matter. Using a warrant to obtain the business records of a
corporation or an executive suspected of fraud is quite another.
Although the same body of law applies in both instances, the techniques used
to draft the applications for these warrants and to carry out the searches
differ significantly. This article addresses some of these differences and
suggests ways investigators can accelerate the process of obtaining search
warrants in fraud cases, while minimizing the possibility that errors will
be found by a court after the search has been completed.
Search warrants are very powerful investigatory tools, as well as very
restricted ones. They permit agents of the government to invade a person's
home, personal papers, and privacy, in order to search for and remove
particular items of evidence. In short, warrants are intrusive, and for this
reason, they must be specific. In this regard, a search warrant differs
from a subpoena duces tecum,1 which permits subjects to conduct their own
searches for requested items while permitting the government to embark on a
fairly wide-ranging and speculative inquiry for possible evidence.
By contrast, in order to obtain a search warrant, investigators must
demonstrate two things. First, they need to show probable cause that a
specific crime was committed. Second, they must demonstrate probable cause
that some type of physical evidence currently can be found in a particular
place. Both of these requirements have their own nuances when applied in the
context of fraud, as opposed to reactive crimes.
Identifying the Crime
Fraud is a crime of deception. Someone attempts, whether successfully or
not, to deceive another party, usually for the purpose of obtaining money or
something else of value. Obtaining the item of value is not the crime.
Likewise, in a case where someone trades a worthless item for cash, the
exchange is not the crime. In both scenarios, the act of deception, the
"telling of the lie," is the crime.
An example may clarify this basic, but important, point.2 The U.S. Air
Force contracts "Aerospace, Inc.," to supply parts for military aircraft.
Unknown to the Air Force, the company intentionally uses substandard metals
in the manufacture of these parts. Investigators wish to obtain a search
warrant to seize company plant documents that they believe will prove that
Aerospace, Inc., is using substandard materials. Because a search warrant
will be issued only if probable cause exists that a crime has been
committed, the investigators should first ask themselves, "What is the
crime?" The answer may come as a bit of a surprise, for the crime is not the
use of substandard metals, nor is it the fact that the suspected firm
supplied parts made with the substandard metals to the Air Force. While both
of these actions are clearly "unethical," simply acting in an unethical
manner is not a crime. Investigators must search the criminal law in order
to find a specific statute violation. In fact, several Federal statutes may
be available. All of them, however, have one thing in common. They are all
fraud statutes. That is, they all require the company to have lied for the
purpose of deceiving the Government into paying for, and accepting delivery
of, substandard parts. This brings investigators to the first rule for
drafting white-collar crime search warrants: They must identify "the lie."
More accurately, they must identify a lie. Typically, several may be
available from which to choose. Although lies may be verbal in nature, in
white-collar crime cases, they usually can be found in the documents used in
the transaction. In this example, Aerospace, Inc., would have supplied some
type of certification to the Air Force stating, directly or indirectly, that
the parts had been manufactured with the correct materials. Such agreements
are standard requirements in military contracts. The lie may be
straightforward. A document may state explicitly that "Aerospace, Inc.,
certifies that the metals used to manufacture these parts is 100 percent
virgin alloy, consisting of 95 percent iron, 4.9 percent nickel, and 0.1
percent carbon." If the metals actually used some other mixture, then the
certification is false. This certification of a false statement constitutes
In some cases, however, investigators may have to work a bit harder to find
the lie. A document may state simply that "Aerospace, Inc., certifies that
the parts meet all contract requirements." Identifying deception now becomes
a two-step process. Locating the company's certification merely represents
the first step. The second step requires investigators to identify the
contract, pursuant to which the parts are being provided, and the
"requirements or specifications" contained in that contract. The
specification for the metals to be used in the manufacture of the parts
usually will be found in this contract. Taken together, a company's contract
specifications and certification will constitute the lie.
Ensuring the Lie is Material
In any case, though, this information is not enough. To constitute a crime,
a lie must be material. In other words, the lie must be important to the
party being deceived. This is not a trivial requirement. More than one
criminal investigation has ended after many months of effort because the lie
relied on by the prosecution turned out to be immaterial to the deceived
party. In the fictitious Aerospace, Inc., example, the contract between the
company and the Air Force further states that the turbine blades must be
forged at a temperature of 2000 F. The certification states that the
forging took place at this temperature, but in fact, the forging took place
at 2500 F, technically making Aerospace's certification false. However, the
Air Force may not care about the temperature at which the forging took
place, as long as the forging temperature did not drop below 2000 F. In
such cases, the lie is not important. Therefore, it is not legally material
and will not support a charge of criminal conduct.
A different example may further clarify this point. An investigation is
initiated to determine whether "BigBank" has been defrauded by a brokerage
agency that specializes in preparing and submitting loan applications to
banks on behalf of clients in need of financial assistance. The loan
applications used by BigBank require applicants to list their credit cards.
Among other deceits, the brokerage agency has stated falsely on the
applications that each client holds two major credit cards. For several
reasons, the lie may not be material. One reason may be that the application
forms are outdated, and the bank no longer relies on credit card information
when deciding whether to issue personal loans. Another reason may be that
the loan amounts requested are small enough that the bank does not care
whether these applicants possess credit cards. The significant point is that
investigators must not take the importance of any false statement for
granted. They must be sure that the lie upon which they are focusing is
The procedure used to ensure this point is fairly straightforward.
Investigators should interview the party who has been deceived and ask
explicit questions about the importance of each lie. When the defrauded
party is a company or a government agency, then the person who is
responsible for reviewing the relevant document on behalf of that
organization should be interviewed. Alternatively, investigators should
interview the person responsible for handling a specific matter tied
directly to the lie. These two people may not be one and the same, and
investigators will have to decide which one to interview.
For instance, in the Aerospace, Inc., example, a Government inspector may
review each certification submitted by the company to ensure that on the
face of each document, all requirements of the contract are met. This
inspector may believe that it is important that the certification states
that forging occurred at 2000 F. The inspector may tell investigators that
if he had known that the certification was false and that the forging
temperature was 2500 F and not 2000 F, he would have rejected the shipment
of blades. However, the engineer responsible for designing the engine in
which these blades are used may know that regardless of the contract
requirements, a false forging temperature is not important as long as the
actual temperature is above 2000 F. Although interviewing either of these
persons should be adequate for the purpose of proving probable cause for a
search warrant, investigators must remember that at trial, the proof must be
"beyond a reasonable doubt." Therefore, it will do the prosecution little
good if a search warrant is obtained and executed based on the inspector's
belief that the lie was important, only to discover later, perhaps on the
eve of trial, that an Air Force engineer is prepared to testify for the
defense that the lie investigators consider a crime is not material. To
avoid such a scenario, investigators may have to interview both persons to
ensure the right answer to this crucial question.
When drafting the application for white-collar crime search warrants,
investigators must describe in detail what documents and statements they are
relying on to prove that a lie exists and explain why the lie is a material
one. To avert later complications, investigators always should include their
sources for this information.
WRITING FOR PROSECUTORS AND MAGISTRATES
Investigators commonly complain that prosecutors take too long to approve
search warrant applications in white-collar crime cases. Among prosecutors,
there is a common complaint that the applications submitted by investigators
for such warrants require too much additional work before they can be
approved. To a significant extent, these divergent complaints stem from the
same root cause. Any search warrant application must explain clearly,
precisely, and completely to a third person (a judge or a magistrate) what
the crime is, what evidence establishes the crime, and what evidence the
government wishes to seize during the proposed search.
A prosecutor reviewing a warrant application is acutely aware of two
factors. First, any application submitted to a court must survive close
scrutiny by the reviewing magistrate. Second, after the search has been
executed, the application must survive the inevitable attack that will be
brought by defense counsel. For these reasons, conscientious prosecutors
take their time when reviewing warrant applications.
Speeding the Process
Investigators can take steps to help speed the process. First, they should
remember that applications must be understandable. This is a deceptively
simple statement. It is also the bane of most prosecutors.
A magistrate is not aware of the history of the investigation, the nature of
the crime (the lie), or the regulations that the subjects attempted to evade
through fraud. In a complex scheme, such as many Medicare frauds, the
background necessary to convince a magistrate that the subjects' actions
constitute a crime must be drafted carefully.
As stated above, the description must be clear, detailed, and complete.
Putting these three elements together is not particularly easy. It takes
time and effort, as well as a command of the written language and the
intricacies of the investigation. To accomplish this goal, investigators
must know what they plan to say in the application. They should put together
an outline of what they need to establish and organize this in the same
order that they intend to use in the application.
Having done this, investigators then should meet with prosecutors and
discuss the outline. Together, they should decide the statute(s) with which
to charge the suspects. This is a significant point, because many white-
collar criminals violate more than one criminal statute.
For example, a scheme to defraud a federally insured financial institution
may involve false statements to that institution, false statements to a
Federal agency supervising that institution, mail fraud, bank fraud, and
conspiracy. Given the status of the investigation, investigators may find it
easier to establish probable cause for certain violations over others.
Alternatively, the choice of a particular violation may permit investigators
to search for and to seize valuable evidence, when choosing a different
violation would not permit such search and seizure.
Once the statute is chosen, investigators should request that the prosecutor
provide a list of the "essential elements" of that statute. Essential
elements are generic facts that must occur to establish the violation of a
Appellate courts often list these elements in their judicial opinions, and
trial courts must describe them to juries in criminal cases before
permitting deliberations to begin. Therefore, these elements are readily
available. In the warrant application, investigators should note the
information they have to support each element, as well as the source of that
information. Next, investigators must decide what documents they need to
seize during the search. As stated previously, a search warrant is not a
subpoena. Investigators simply cannot request authority to search for all
documents pertaining to the investigation. On the contrary, they must be
very specific. Therefore, investigators should ask themselves and their
cooperating witnesses the following questions:
-- What documents does the company use that are relevant to this
-- Why are these documents relevant? Or, in other words, how might these
documents be used to prove this case against the company and its officers
-- Where does the company maintain these records?
-- For how long does the com-pany maintain these records?
The first two points should be discussed with the prosecutor. Being familiar
with the laws governing fraud, the prosecutor may recognize that a
particular document is not worth the effort of conducting a search, or the
prosecutor may suggest that additional documents are necessary to prove the
case at trial. Investigators often overlook the last two questions. They
should remember that the warrant application must establish probable cause
not only that a crime was committed but also that the documents that
investigators wish to seize as evidence of the crime currently exist on the
Usually two methods accomplish this task. The first involves the use of
cooperating employees (current and former), who could provide investigators
this information through firsthand knowledge. However, where former
employees are the source of such information, their knowledge may not be
current, and the information they provide may have to be updated through
The second method is based on the required business practices of a company
or profession. For example, Federal and State regulations require that
medical doctors maintain the records of their patients for a specified
number of years. If a physician bills insurance carriers on behalf of
patients, the physician also is required to maintain the patients' financial
records for another specified period of time. These regulations can be used
in a search warrant application to establish probable cause that the
physician under investigation maintains medical and financial files of
Investigators reasonably can assume that those files can be found at the
physician's place of business. It should be noted, however, that doctors may
maintain records of former patients at off-site locations. If investigators
wish to seize these records, additional information as to where the files
are maintained may be necessary. Similarly, defense contractors, financial
institutions, accountants, and numerous other businesses and professionals
are required by statutes, regulations, or ethical rules to maintain records
for varying periods of time. For this reason, it is important that
investigators learn under what requirements the suspect(s) may be operating
and then put this information in their search warrant application.
Descriptions of the documents to be seized should be included in the warrant
application in two places. First, they should appear in the general body. As
investigators describe each portion of the fraudulent scheme, they should
mention the pertinent documents that provide evidence of the scheme, along
with the information they possess demonstrating how the company creates,
uses, and maintains these documents. Again, investigators should include
their sources for this information. In this way, the application will make
clear that probable cause exists to seize the requested documents.
The end of the application includes a list of each type of document to be
seized. Investigators should be specific when compiling this list. For
example, if investigators only have probable cause to seize loan
applications for home mortgages made from 1989 through 1991 for houses
located in a particular community, then they should state this in the list.
It would be counterproductive, for example, to seize all loan applications
from 1985 for several communities. In trying to do so, one of two things
may happen. If investigators are fortunate, the prosecutor or the magistrate
will refuse to approve the warrant application as written. Or worse, the
warrant will be approved; investigators will seize the additional loan
applications; the warrant will be attacked by defense counsel; the
additional evidence may be suppressed; and the court may rule that the
evidence has "tainted" the investigation and the government's prosecution.3
Put simply, stretching probable cause in this way is not worth the potential
Telling the Story Clearly
White-collar crimes can be intricate, and the investigation leading to a
warrant application may be complex. Therefore, investigators should not
expect a magistrate to read a tangled or technical treatise of the
investigation and then spend time trying to decide if the warrant should be
approved. Similarly, investigators should not expect a prosecutor to permit
such an application to reach the magistrate.
An application must be written simply, describing everything clearly.
Again, it is critical for investigators to assume that the prosecutor and
the magistrate know nothing about the investigation. Hence, everything must
be explained. Because fraud schemes often can be complex, investigators
should first break down schemes into parts and then string the parts
together to tell a story. After completeing the first draft, investigators
should give a copy to a fellow investigator who has not been involved
significantly in the matter. The reviewer should identify portions that are
unclear or confusing and make suggestions for improving the application.
Investigators should then revise those portions of the application.
Search warrants are important investigatory tools. Investigators should not
avoid securing warrants in white-collar crime cases merely because the
process necessary to obtain them appears difficult and time-consuming.
By following a series of step-by-step procedures, investigators and
prosecutors can reduce significantly the time necessary to draft warrant
applications. As a result, both groups may consider the use of warrants more
often. The ultimate result will be stronger prosecutions.
1 Writ requiring that a party summoned to appear in court bring a document
or other pieces(s) of evidence for examination by the court.
2 This example examines only Federal criminal law. Law enforcement officers
of other than Federal jurisdiction who are interested in this article should
consult their legal advisor.
3 State v. Novembrino, 105 New Jersey, 519 A. 2d 820 (1987); but see United
States v. Leon, 468 U.S. 897 (1984) (establishing good faith exception in
Mr. Grosso, a former Assistant U.S. Attorney, is now in private practice
in Washington, DC.
Brought to you by - The 'Lectric Law Library
The Net's Finest Legal Resource For Legal Pros & Laypeople Alike.