Monday, November 30, 2015

Probe Into Northern California Foreclosure Sale Bid Rigging Racket Hitting A Bump In The Road? Defandants' Lawyers Accuse Sneaky Feds Of Planting Bugs Inside Metal Sprinkler Box, Planter Box & Vehicles Parked On Street Near Courthouse Entrance

In San Francisco, California, The Recorder reports:
  • You might want to watch what you say on your way in and out of court.

    According to court papers filed [two weeks ago], federal agents placed secret recording devices in at least three locations around the entrance to the San Mateo County courthouse in Redwood City without first getting judicial approval.

    The courthouse bugs were used in 2009 and 2010 to investigate bid-rigging at public foreclosure auctions. Their existence surfaced in a motion from defense lawyers for a group of five real estate investors accused of colluding to deflate prices at the auctions, which were held on the courthouse steps.

    The defense lawyers, led by Latham & Watkins partners Daniel Wall and Ashley Bauer, are asking U.S. District Judge Charles Breyer to suppress more than 200 hours of recorded conversations and all evidence gained from them. They maintain that their clients had a reasonable expectation of privacy when they gathered to speak in hushed voices away from other auction participants.

    "Imagine, as a judge, if you find out that the stairs that you walk up and down all the time are bugged," said Doron Weinberg, one of the defense lawyers on the case. "We believe that Judge Breyer will take the issue seriously and we have confidence that he'll make a wise decision."

    The San Mateo County case is part of a sweeping antitrust sting by federal prosecutors in the Northern District of California targeting real estate investors who allegedly conspired to manipulate public auctions during the height of the foreclosure crisis. Prosecutors have secured more than 50 guilty pleas in similar cases springing from auctions in Alameda, Contra Costa, San Francisco and San Mateo counties.

    According to Weinberg, Louis Feuchtbaum at Sideman & Bancroft figured out that the recordings were not made by federal agents or informants wearing body microphones—something that the defense contends would have been allowable. "Lou began to realize that these were not consensual overhearings," Weinberg said. "They were somehow being recorded by an outside force."

    The defense motion claims that beginning in December 2009 government agents planted microphones in three locations near the entrance of the courthouse at 401 Marshall Street in Redwood City: inside a metal sprinkler box attached to the wall, in a large planter box and in vehicles parked on the street. The hidden microphones were activated at least 31 times through September 2010, according to the filing.

    The only authorization came from attorneys working for the FBI and Antitrust Division of the U.S. Department of Justice, the motion states.

    "The government apparently decided that it could record all conversations that occurred near the courthouse without any concern that it would capture communications protected by the Fourth Amendment and Title III," the defense lawyers wrote, pointing out that the courthouse steps are regularly the site of privileged conversations between lawyers and their clients. "What the government did here is not unlawful only because it occurred outside a courthouse, but that fact makes it all the worse," they wrote.

    The defense team includes Matthew Jacobs of Vinson & Elkins and Jeffrey Bornstein of Rosen Bien Galvan & Grunfeld, in addition to Weinberg, Feuchtbaum and the Latham lawyers.

    A spokesperson for the Justice Department declined to comment.

    Sideman's Feuchtbaum said that the courthouse recordings have significance that extends beyond the San Mateo foreclosure case.

    "If this is allowed to stand," he said, "I and every other lawyer who knows about this is on notice that they can never have an expectation of privacy on the courthouse steps since the government has assumed for itself the right to plant hidden microphones there."

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