United States v. Yusuf

Rule of Law:

When an officer relies on information from a sister governmental agency in a search warrant affidavit, the officer's statements are not made with reckless disregard for the truth unless the officer had an obvious reason to doubt the accuracy of the information provided.

Facts:

• Between April 16-19, 2001, United Corporation ('United'), a supermarket chain, made seven large cash deposits totaling $1,940,000, comprised solely of $50 and $100 bills, into its bank account.
• Due to the unusual nature of the deposits, the bank filed a Suspicious Activity Report with the FBI, which initiated a criminal investigation into potential money laundering.
• During a separate 1999 investigation, Immigration and Naturalization Service (INS) agents found between $3 million and $7 million in cash, also in $50 and $100 denominations, inside a safe at one of United's stores, though no large deposits were made at that time.
• The FBI obtained a court order compelling the Virgin Islands Bureau of Internal Revenue (VIBIR) to produce United's tax records.
• VIBIR provided the FBI with computer transcripts that erroneously showed United had underreported its gross receipts by over $40 million for 1998 and also inaccurately stated that United had failed to file corporate tax returns for 1999 and 2000.
• The information from VIBIR was incorrect because the agency had failed to check all of United's records, which were maintained under more than one Employer Identification Number (EIN).
• FBI Special Agent Thomas Petri, after making multiple inquiries with VIBIR officials who repeatedly assured him their information was complete and accurate, included the erroneous tax information in a sworn affidavit to obtain search warrants for United's properties.
• The affidavit also included information about United making large payments to Hamdan Diamond Corp., a foreign company partially owned by United's primary shareholder, Fathi Yusuf.

Procedural Posture:

• A federal grand jury returned a seventy-eight count superseding indictment charging United Corporation and several individuals with various federal crimes.
• The defendants filed a motion to suppress evidence in the U.S. District Court, requesting a Franks hearing to challenge the truthfulness of the affidavit supporting the search warrants.
• The District Court conducted the Franks hearing and found that FBI Agent Petri had made false statements in the affidavit with reckless disregard for the truth.
• After excising the false statements from the affidavit, the District Court concluded that the remaining information was insufficient to establish probable cause.
• The District Court granted the defendants' motion and suppressed all evidence obtained from the execution of the search warrants.
• The Government, as the appellant, appealed the District Court's suppression order to the U.S. Court of Appeals for the Third Circuit.