Eighth Circuit Affirms Tax Preparer Conviction, Rejecting Argument for Search Warrant Suppression (2/12/20)

In United States v. Keleta, ___ F.3d ___, 2020 U.S. App. LEXIS 3566 (8th Cir. 2020), here, the court sustained Keleta’s conviction for “conspiring to defraud the United States and willfully aiding and assisting in the filing of a false tax return” but remanded for resentencing.  This case seems to be a garden variety case of tax preparer fraud.  The issues on appeal were: (i) whether the trial court erred in denying a motion to suppress evidence seized by search warrant; (ii) whether the prosecutor committed misconduct in certain statements before the jury; and (iii) whether the trial court erred in applying a four-level enhancement under S.G. § 3B1.1(a) as organizer or leader of a criminal activity involving five or more participants.  Issues (ii) and (iii) are fairly routine (although issue (ii) is likely a one-off occurrence, unlikely to appear in future trials).  I will address only issue (i)

The motion to suppress was based on a search warrant.  Here are key excerpts for issue (i) (Slip Op. 2-3, 7-8):

Asmerom “Ace” Keleta owned Eriace Enterprise, LLC (Eriace), which operated several tax-preparation businesses in the St. Louis metropolitan area under the names U-City Tax Service and Ace Express Tax Service. In 2012, the IRS’s Scheme Development Center (SDC) forwarded information about Eriace to the IRS’s Criminal Investigation Division. After reviewing the information, investigators noted that a high percentage of tax returns prepared by Eriace claimed certain tax credits.  They also found that much of the information used to seek these tax credits “was not verifiable by other information filed with the IRS” and that the unverifiable information was often combined with verifiable information in ways that made the taxpayer eligible for the maximum or near the maximum available tax credit. The personal tax returns for Keleta and U-City Tax Service employees Miyoshi Lewis and Teklom “Tek” Paulos fit this pattern.  

On February 27, 2013, IRS Special Agent Danette Coleman conducted an undercover operation at a U-City Tax Service branch in University City, Missouri. Lewis prepared a tax return for Coleman while Paulos helped another customer. Keleta was not present at the time. Lewis initially calculated a refund amount of $44 based on the information Coleman provided. When Coleman asked why the refund was so low, Lewis responded that she could “make it more, but the fee will go up.” Lewis then entered false information and calculated a refund of approximately $4,200. She charged Coleman $500 cash for obtaining this increased refund.  

The IRS also received three anonymous letters alleging tax fraud at that U-City Tax Service branch. The anonymous informant claimed that Keleta had sold the use of his preparer tax identification number (PTIN) and electronic filing identification [*3] number (EFIN) to several individuals, including Paulos, who used them to file tax returns containing fraudulent information. The IRS corroborated that Lewis, Paulos, and several other individuals named in the letters were “friends” on Facebook. The IRS also found that numerous withdrawals from Eriace’s business checking account appeared to be personal in nature. 

Based on this information, IRS Special Agent Nicholas Kenney obtained a warrant to search the U-City Tax Service branch and seize records found on the premises. The government executed the warrant on April 13, 2013. It seized computers, cell phones, client files, and other items, including a signature stamp with Keleta’s signature.

* * * *

Article on the Fourth Amendment in a Digital World (10/28/17)

I recently alerted readers to the Supreme Court's acceptance of certiorari in Microsoft Corp. v. United States, 829 F.3d 197 (2d Cir. 2016), reh. denied, 855 F.3d 53 (2d Cir. 2017).  The progress of the case in the Supreme Court can be tracked at the SCOTUSblog, here. My blog entry is Supreme Court Accepts Cert in Microsoft Involving Search Warrants for Emails on Foreign Servers (10/17/17), here. 

Since the application of the Fourth Amendment in the current environment where much of our private information, previously physically stored in our homes or other private places and thus subject to robust Fourth Amendment protection, is now on servers on the web and in the possession of third parties, there is a disconnect with historic Fourth Amendment analysis.

I recently read a helpful article on this subject and alert readers as to the article if they want to read more on this issue pending whatever learning the Supreme Court offers in Microsoft.  The article is Laura K. Donohue, The Fourth Amendment in a Digital World, 71 N.Y.U. Ann. Surv. Am. L. 553 (2017), here.  I excerpt some of the introduction  (footnotes omitted) for readers to see whether they might be interested in reading the article:

Fourth Amendment doctrine no longer reflects how the world works. Technology has propelled us into a new era. Traits unique to a digital world are breaking down the distinctions on which the Court has traditionally relied to protect individual privacy. 

What are these characteristics? Digital information is ubiquitous. Individuals cannot go about their daily lives without generating a footprint of nearly everything they do. The resulting data is accessible, recordable, and analyzable. And because it is digital, it can be combined with myriad sources, yielding deeper insight into our lives. Data is also non-terrestrial and borderless. Bits and bytes populate an alternative world. They may be held on a server, but their generation, transfer, and availability are not tied to territory, undermining doctrines that rely on three-dimensional space. Technology, moreover, embodies an efficiency drive. Innovation makes it possible to do more, and to do it better, faster, and cheaper than before. So more information is being captured, even as the resource expenditures required steadily decline. Simultaneously digital interfaces are rapidly proliferating, replacing traditional modes of interaction. This means that new types of information are available, even as our ability to conduct our daily lives has become heavily dependent on technology. It has become a non-option to eschew the digital world, if one wants to live in the modern age. 

These characteristics undermine the distinctions that mark Fourth Amendment doctrine. Consider, for instance, the diremption between private and public space. The Court has long relied upon this dichotomy to determine what constitutes a reasonable expectation of privacy. It draws a line at the walls of the home, citing the risk assumed by individuals when they go out into public and expressing a reluctance to disadvantage law enforcement by forcing them to turn off their natural senses or to ignore what any ordinary person could ascertain. 

The amount and types of information available in the public sphere, however, have exponentially increased. WiFi and Bluetooth signals can be collected, global positioning systems and vessel monitoring systems operated, and radio frequency identification chips tracked. Automated license plate readers record the time, date, and location of cars, while network data reveals where mobile devices travel day and night. International mobile-subscriber identity-catchers pinpoint the devices located in a given area. Internet protocol databases, in turn, register users' locations. Financial transactions and credit card records place people in certain places at certain times, while cameras, enhanced with remote biometric identification, may be mounted on vehicles, poles, buildings, or unmanned aerial systems, creating the potential for 24-hour monitoring, seven days a week, ad infinitum.  

Q. How Many IRS Special Agents Brandishing Guns Does It Take to Execute a Tax Crimes Search Warrant? A. 73 (12/25/16; 12/26/16)

Carpenter v. Commissioner, IRS, 2016 U.S. Dist. LEXIS 172675 (D CN 2016) here), is an interesting case involving a Bivens action, Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971).  Bivens authorizes an implied federal cause of action based on constitutional violations where there is no statute authorizing the action.  The action is against the individuals causing the violation rather than against the Government.  Bivens actions are not available where, for the alleged violation, Congress has provided a remedy by statute.

The Carpenter decision relates to a motion to dismiss based on inadequacies in the complaint.  Motions to dismiss test the adequacy of the complaint.  Basically, the Court declined to dismiss the main thrust of the claim in order to permit discovery to proceed, with the recognition that, after discovery, some or all of the issues could be resolved by summary judgment.  There will be further trial level proceedings in the matter.  But, some aspects of the decision caught my attention.

The factual background is interesting because, according to the allegations in the complaint not yet tested in discovery, the IRS agents executing the search warrant at Carpenter's place of business were way over the top in the manner in which they executed the search warrant.

The affidavit in support of the search warrant alleged that the agents would search for "for evidence that Carpenter was engaging in criminal tax offenses, including conspiracy to impede the lawful function of the IRS, 18 U.S.C. § 371, and aiding and assisting the preparation of false income tax returns, 26 U.S.C. § 7206(2)."  The affidavit did not mention "any specific dangers anticipated in executing the proposed search nor any exigent circumstances justifying a highly armed raid on the property."

The Facts (Principally as Alleged by Carpenter)

Here is a description from the case of how the IRS agents executed the search warrant:

On April 20, 2010, Schrader and 72 unknown IRS agents (the "John Doe" defendants) executed the search warrant at 100 Grist Mill Road in order to obtain evidence against Daniel Carpenter and GMC. Carpenter alleges that the IRS agents wore "black Kevlar bullet-proof vests and were brandishing automatic weapons" during the execution of the search, which was conducted in the same manner as a SWAT operation. Id. at ¶¶ 8. During the search, Carpenter and the other GMC employees were not informed of which crime they were suspected of committing, nor were they provided with the search warrant affidavit or any other document indicating which crimes were at issue. Id. 

During the search, the government seized 322 banker boxes of documents over the course of eighteen hours, a period in excess of what was authorized by the warrant. Id. at ¶ 9. During the search, the agents held numerous employees against their will for long periods of time and interrogated them. Id. Carpenter was "placed in custody, threatened with handcuffs, and questioned, despite his invocation of his right to have counsel present." Id. at ¶ 10. He was also "threatened with arrest" when he attempted to speak to counsel or leave the room to make a call. Id. Carpenter also alleges that the government "ransacked" his office during the search. Id. at ¶ 28. 

Carpenter alleges that Schrader had a duty to supervise the John Doe defendants in their use of force and the manner in which they carried out the search, and that he failed to do so. Id. at ¶¶ 21, 24. Specifically, he alleges that Schrader failed to supervise or instruct the agents on what was appropriate conduct during the search, and that Schrader was either "directly responsible" for the intimidating tactics or "deliberately indifferent" to the possibility that the search would be carried out in an unconstitutional manner. Id. at ¶ 21. Carpenter alleges that Schrader also "consciously disregarded the substantial risk that he had authorized the custodial interrogation" of Carpenter without reading him his Miranda rights in violation of his Fifth and Sixth Amendment rights to have counsel present. Id. at ¶ 28. 

Carpenter alleges that Schrader's acts were intentional and motivated by animus against Carpenter because of his reputation as an "anti-government" actor and his litigation against the government in the Massachusetts case. Id. at ¶ 26. Accordingly, Carpenter alleges that the manner in which the search was carried out was deliberately intended to "harass, intimidate and humiliate" him. Id. Carpenter further claims that the IRS has a policy and practice of using armed agents to enforce search warrants for [*8]  tax documents, despite the fact that the IRS manual "requires investigations to be carried out with the least intrusive means necessary." Id. at ¶ 22; see also id. at ¶ 25. Carpenter does not allege, however, that Schrader had any responsibility for setting IRS policies. 

To date, Carpenter and his related entities have not been indicted for the tax offenses alleged in the warrant affidavit.

Seventh Circuit Opinions (Majority and Dissenting) on Use of Stingray Technology for Cell-Phone Information (11/26/16)

I have written before about federal law enforcement -- specifically IRS -- use of cell site simulators, often called Stingrays (the trademark of one brand of simluator).  IRS Use of Cell-Site Simulators (Also called Stingray) to Retrieve Information About and From Cell Phones (Federal Tax Crimes Blog 12/3/15), here.  The Seventh Circuit has just issued a decision involving the use of cell site simulators.  The technology was not used in a criminal tax investigation, but it could be so used.  Of course, in a federal criminal investigation, as noted in the prior blog entry, the DOJ Guidelines for use will be honored and the IRS has agreed to respect those guidelines.  But, since court opinions about use of the technology are rare (at least to date), I thought readers might want to know about a recent case with thoughtful majority and dissenting opinions on the use of the technology.

In United States v. Patrick, ___ F.3d ___, 2016 U.S. App. LEXIS 21090 (7th Cir. 2016), here, local police located a person for whom an arrest warrant had been issued by using stingray technology.  Police had first obtained a warrant to use the technology.  It did not specifically advise the court issuing the warrant for the electronic location as to precisely how it would locate the target.  Federal charges were then brought based on the fruits of the arrest.  The use of the stingray technology to locate the person was discovered only in post appeal briefing.  So, the issue presented to the Seventh Circuit was whether the use was inappropriate -- either at all or without a warrant or without a warrant issued for its specific use -- and if not in any respect, could this person obtain relief.

Judge Easterbrook wrote the majority opinion, joined by Judge Kanne.  Judge Wood wrote the dissenting opinion.  I have had occasion over the years to focus on the opinions of Judges Easterbrook and Wood.  Both are great judges.  I am less familiar with Judge Kanne, but he did not author the opinions.

I think the briefs might be helpful, but have been unable to log onto Pacer to obtain them.  I did find the link to the Amicus brief, here.:

I recommend that readers interested in this issue read both opinions.  I won't try to summarize them here, but I will excerpt portions discussing the potential uses of the technology.

Judge Easterbrook quotes the DOJ Guidance which I quote and link in my original blog entry.

Judge Easterbrook then says:

If the Department's description is accurate (a question not explored in this litigation) law-enforcement officials get the same sort of information that a phone company could provide using its own facilities, and they get it in real time rather than waiting for the phone company to turn over data. But instead of collecting information on just one person, as the warrant in this proceeding entitled the police to learn Patrick's location, a cell-site simulator collects the relative location of everyone whose phone is induced to connect to the simulator—though it may discard that information before alerting officials to the presence of the sought-after person (just as the phone company, which has location data about all of its customers, would disclose only one person's location). 

One potential question posed by use of a cell-site simulator would be whether it is a "search" at all, or instead is covered by Smith v. Maryland, 442 U.S. 735, 99 S. Ct. 2577, 61 L. Ed. 2d 220 (1979), and United States v. Knotts, 460 U.S. 276, 103 S. Ct. 1081, 75 L. Ed. 2d 55 (1983). The former holds that a pen register is not a search because it reveals the making of a call, and the number called, but not the call's communicative content. The latter holds that the use of a beeper is not a search, because it reveals a suspect's location but nothing else. Recent decisions such as United States v. Graham, 824 F.3d 421 (4th Cir. 2016) (en banc), and United States v. Carpenter, 819 F.3d 880 (6th Cir. 2016), apply these principles to hold that tracking a person via data from phone companies is not a search within the scope of the Fourth Amendment. (Graham involved historical cell-tower location information and Carpenter involved "transactional records" from phone companies, so both cases dealt with the sort of information covered by the location warrant in this proceeding.) Police freely use databases, containing information such as the addresses associated with automobile license plates and persons licensed to drive, to track down suspects; they search trash for credit card receipts showing where he made purchases; they consult a suspect's relatives and friends (and sometimes his enemies) to learn his whereabouts; no one thinks that those methods require a search warrant. 

A contrary line of argument analogizes cell-site simulators to GPS locators, which are treated as searches when police enter private property to install them, see United States v. Jones, 565 U.S. 400, 132 S. Ct. 945, 181 L. Ed. 2d 911 (2012), and may be searches when used for extended durations even if installed with a vehicle owner's consent, id. at 954-64 (concurring opinions of Sotomayor and Alito, JJ.). If a cell-site simulator is like a GPS tracker, and if the approach of the concurring opinions in Jones is adopted, then it would be necessary to know how long the police used a simulator while searching for Patrick and just how accurate is the location information it provides. (Is it information that leaves uncertainty about where in several city blocks a suspect may be, such as the beeper in Knotts, or is it closer to the precise location supplied by a GPS tracker?) Cf. Kyllo v. United States, 533 U.S. 27, 121 S. Ct. 2038, 150 L. Ed. 2d 94 (2001) (thermal image of the inside of a house is a search, given a person's strong privacy interest in his dwelling). 

The United States has conceded for the purpose of this litigation that use of a cell-site simulator is a search, so we need not tackle these questions. The parties join issue, however, on the significance of the fact that police did not reveal to the state judge who issued the location-tracking warrant that they planned to use a cell-site simulator—indeed, implied that they planned to track him down using his phone company's data. Patrick says that leaving the judge in the dark (perhaps misleading the judge by omitting a potentially material fact) makes the location-tracking warrant invalid. This poses the question whether a judge is entitled to know how a warrant will be executed. 

Second and Ninth Circuit Opinions on Email Issues (7/14/16; 7/15/17)

Emails can be the mother lode in criminal prosecutions.  Two Courts of Appeals in the last two days issued major decisions in cases involving emails and privacy.

In Microsoft Corp v. United States, ____ F.2d ___,  2016 U.S. App. LEXIS 12926 (2d Cir. 7/14/16), here, the Second Circuit panel offered the following opening case summary:

Microsoft Corporation appeals from orders of the United States District Court for the Southern District of New York (1) denying Microsoft’s motion to quash a warrant (“Warrant”) issued under the Stored Communications Act, 18 U.S.C. §§ 2701 et seq., to the extent that the orders required Microsoft to produce the contents of a customer’s e‐mail account stored on a server located outside the United States, and (2) holding Microsoft in civil contempt of court for its failure to comply with the Warrant.  We conclude that § 2703 of the Stored Communications Act does not authorize courts to issue and enforce against U.S.‐based service providers warrants for the seizure of customer e‐mail content that is stored exclusively on foreign servers.

For earlier blogs on the the Microsoft Case and the Stored Communications Act, see

• The Stored Communications Act and Emails: An Overview, Federal Tax Crimes Blog 4/25/15), here.
• Peter D. Hardy, and Carolyn H Kendall, Guest Blog on Stored Communications Act Reach to Cloud Storage Outside the U.S., Federal Tax Crimes Blog 4/25/15), here.

In In re Grand Jury Subpoena,JK-15-029, ___ F.3d ___, 2016 U.S. App. LEXIS 12860 (9th Cir. 7/13/16), here, the Ninth Circuit's staff summary of the opinion is:

SUMMARY*
* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. 

Grand Jury Subpoena 

The panel reversed the district court’s order declining to quash a grand jury subpoena seeking a broad range of information from the State of Oregon as part of a federal investigation into activities of former Governor John Kitzhaber, and remanded. 

For several years before Kitzhaber left office, copies of his personal emails were archived on Oregon’s computer servers. The panel agreed with Kitzhaber, an intervenor, that he had a reasonable expectation of privacy in much of his personal email (although the Fourth Amendment’s protection does not extend to any use of a personal email account to conduct public business), and that the subpoena in this case — which is not even minimally tailored to the government’s investigatory goals – is unreasonable and invalid. The panel held that Kitzhaber may not assert the attorney-client privilege for his communications, including communications regarding potential conflicts of interest and ethics violations, with the State of Oregon’s attorneys. The panel explained that whatever privilege may protect those communications belongs to the State of Oregon, not to Kitzhaber as an individual officeholder in his personal capacity. 

The panel remanded with instructions to quash the present subpoena in its entirety. The panel declined to address in the first instance issues likely to arise concerning the means of segregating and producing the material requested by a subpoena tailored in accordance with this opinion.

When I have more time (perhaps early next week), I will supplement this blog entry.

Addendum 7/15/16 3:00 pm:

Seizure of Hard Drive Computer Data by Mirroring and the Fourth Amendment (6/2/16)

In United States v. Ganias, ___ F.3d ___, 2016 U.S. App. LEXIS 9706 (2d Cir. 2016) (en banc), here, the Second Circuit held (from the opening of the opinion):

Defendant-Appellant Stavros Ganias appeals from a judgment of the United States District Court for the District of Connecticut (Thompson, J.) convicting him, after a jury trial, of two counts of tax evasion in violation of 26 U.S.C. § 7201. He challenges his conviction on the ground that the Government violated his Fourth Amendment rights when, after lawfully copying three of his hard drives for off-site review pursuant to a 2003 search warrant, it retained these full forensic copies (or “mirrors”), which included data both responsive and non-responsive to the 2003 warrant, while its investigation continued, and ultimately searched the non-responsive data pursuant to a second warrant in 2006. Ganias contends that the Government had successfully sorted the data on the mirrors responsive to the 2003 warrant from the non-responsive data by January 2005, and that the retention of the mirrors thereafter (and, by extension, the 2006 search, which would not have been possible but for that retention) violated the Fourth Amendment. He argues that evidence obtained in executing the 2006 search warrant should therefore have been suppressed. 

We conclude that the Government relied in good faith on the 2006 warrant, and that this reliance was objectively reasonable. Accordingly, we need not decide whether retention of the forensic mirrors violated the Fourth Amendment, and we AFFIRM the judgment of the district court.

Although the issue arose in a tax evasion case, it is an issue that pervades the criminal law given that computers are ubiquitous and can be a mother lode in a criminal investigation.  The opinion is very long and, with respect to computer data, somewhat complex.  So, I will try to summarize, in my own words, the trajectory of reasoning.  In some of my summary, I add some minor spin of my own to connect the reasoning.

First, at the outset, this is an en banc opinion of the Second Circuit.  Two judges concurred with the holding in the case.

Second, the only holding in the case was that any Fourth Amendment violation was irrelevant because the Government agents had acted reasonably in obtaining and executing the search warrants and then in access the computer data.

Third, the Court did not decide the Fourth Amendment issue as to whether the computer data had been illegally seized and retained in violation of the Fourth Amendment.  The computer data in question had been seized from the office of Ganias, a CPA, incident to a nontax investigation of two of Ganias' clients.  The data was seized pursuant to search warrant by taking a "mirror image" of Ganias' computers.  That mirror image was an exact copy of the computer hard drives.  As had the hard drives, the mirror image contained information within the scope of the search warrant (related to the two clients being investigated) and information outside the scope of the search warrant (for Ganias personally and other clients).  Since it is generally not practical in seizing such computer data to separate immediately the data within the scope of the search warrant and data outside its scope, all of the data is seized via the mirroring; the separation process occurs later.  In separating out the data outside the scope of the search warrant, a rough index will be prepared stating generally the type of the information separated out.  More detailed review of the data within the scope of the search warrant can then occur as the needs of the investigation require, with such indices and analyses as appropriate.  But the information outside the scope of the search warrant is not supposed to be reviewed beyond the requirement of preparing a broad index.

To use a hard copy document analogy, say that the search warrant authorizes seizure of documents in the CPA's possession related to clients A and B and, because of impracticality of making the separation of documents upon the initial seizure, the officers executing the search warrant seize too much.  Assume that, under the circumstances, the seizure of too much was reasonable and in good faith simply because the officers did not have time to separate while on the premises.  After the separation occurs, the usual drill is to return the documents outside the scope of the search warrant to the person whose premises were searched.  There will often be some generic description of the documents to show why outside the scope of the search warrant -- e.g., documents related to other clients or to the CPA himself -- but review of the documents is not permitted.  Then, if the Government's criminal attention turns to the CPA, it will have the generic description of the documents outside the scope of the search warrant but will not have those documents and will have to obtain those documents through the normal means -- subpoena the CPA or search premises of the CPA where the documents might be.  This is standard fare for Fourth Amendment analysis of overseizures.

The problem is that the hard copy document and document file analogy is an imperfect analogy for computer data.  From the computer user's standpoint, the data may look like it is separated into directories on computers, often called files, because, to the computer user, they seem to function much like hardcopy files containing documents.  But, as the majority notes at length the hardcopy file analogy is inexact in the case of computers.  The problem is that computer data may appear to the computer user to be in discrete segments of the hard drive, but that is not how the computer actually stores the data.  (See the excerpt below.)

IRS Use of Cell-Site Simulators (Also called Stingray) to Retrieve Information About and From Cell Phones (12/3/15)

The IRS's use of so-called cell-site simulators have been in the news recently.  I thought it might be helpful to introduce readers the topic.  First, I will provide some information on the scope of the technology as I understand it and then the legal issues from its use by law enforcement, including the IRS.  I am by no means an expert in the technology and have no unique insight into how the IRS or other law enforcement agencies are using the technology.  I am essentially repeating what I read in the news and tax media.

Nature of the Technology

The American Civil Liberties Union (commonly referred to as "ACLU") has this very brief description, here, of the technology:

Stingrays, also known as "cell site simulators" or "IMSI catchers," are invasive cell phone surveillance devices that mimic cell phone towers and send out signals to trick cell phones in the area into transmitting their locations and identifying information. When used to track a suspect's cell phone, they also gather information about the phones of countless bystanders who happen to be nearby.

Wikipedia has this discussion, here, of the Harris Corporation version, called Stingray, which seems to the most popular version used by law enforcement and the version used by the IRS.  Wikipedia further says that the word "Stingray has also become a generic name to describe these kinds of devices." Wikipedia's general description is (footnotes omitted):

The StingRay is an IMSI-catcher (International Mobile Subscriber Identity), a controversial cellular phone surveillance device, manufactured by Harris Corporation.Initially developed for the military and intelligence community, the StingRay and similar Harris devices are in widespread use by local and state law enforcement agencies across the United States and possibly covertly in the United Kingdom. 

* * * * 

The StingRay is an IMSI-catcher with both passive (digital analyzer) and active (cell site simulator) capabilities. When operating in active mode, the device mimics a wireless carrier cell tower in order to force all nearby mobile phones and other cellular data devices to connect to it. 

The features of the technology that are apparently of most concern are what Wikipedia calls the "Active Mode Operations" and "Capabilities." 

Active mode operations 

1. Extracting stored data such as International Mobile Subscriber Identity ("IMSI") numbers and Electronic Serial Number ("ESN"),
2. Writing cellular protocol metadata to internal storage
3. Forcing an increase in signal transmission power,
4. Forcing an abundance of radio signals to be transmitted
5. Interception of communications content
6. Tracking and locating the cellular device user,
7. Conducting a denial of service attack
8. Encryption key extraction.
9. radio jamming for either general denial of service purposes or to aid in active mode protocol rollback attacks

IRS to Require Search Warrants for All Emails from ISPs (5/15/13)

There has been a brouhaha recently about the IRS accessing older emails on an ISP's site without a search warrant.  I previously wrote about the issue in this blog entry:  Are Emails Stored on the ISP's Computer Subject to Fourth Amendment Protections? (7/28/12), here, discussing the holding in United States v. Warshak, 631 F.3d 266 (6th Cir. 2010).  Briefly, the wording of the Electronic Communications Privacy Act of 1986 gave the IRS the argument that a warrant is not needed to obtain electronic communications older than 180 days,  That eventually caused a firestorm just recently.  As a result of the heat about the issue, the IRS has announced, here, the following policy statement:

Policy Statement 4-120 
Approved: May 3, 2013
(1) Policy Regarding Requests for the Content of Email Communications under the Electronic Communications Privacy Act and the Stored Communications Act.
(2) The IRS will follow the holding of United States v. Warshak, 631 F.3d 266 (6th Cir. 2010), and obtain a search warrant in all cases when seeking from an internet service provider (ISP) the content of email communications stored by the ISP. Accordingly, such information will not be sought from an ISP in any civil administrative proceeding.
(3) Any existing IRS guidance that is not in accord with the foregoing policy statement will be updated. 

The following is from a TNT article discussing this development (Eric Kroh, IRS Says It Will Obtain Search Warrants for All Emails, 2013 TNT 90-2 (5/9/13)):

An IRS spokesman, when asked whether the May 8 statement applies to all electronic communications or to e-mails only, replied, "We are currently aware of and reviewing this issue, our policies, and our guidance, and will update them as appropriate."

Are Emails Stored on the ISP's Computer Subject to Fourth Amendment Protections? (7/28/12)

I had a client who seemed obsessed about not wanting to communicate anything substantive in emails.  I did not think that avoiding substantive email content was a material risk, particularly given the nature of my work (civil and criminal tax controversy, including offshore account matters).  So, I thought I would offer this blog with some thoughts based on some research I have done.

The point of departure will be the case of United States v. Warshak, 631 F.3d 266 (6th Cir. 2010), here, reh'g and reh'g en banc denied, 2011 U.S. App. LEXIS 5007 (6th Cir. 2010), a case of phenomenal scope (and sheer length, some 67 pages in F.3d).  Warshak covers both the email issue and a number of other issues that arise in white collar crime (including its subset, federal tax crimes).  So it is a prominent case and even has its own Wikipedia page, here.

In order to introduce the case, I cut and paste from the opening of the case:

Berkeley Premium Nutraceuticals, Inc.,  was an incredibly profitable company that served as the distributor of Enzyte, an herbal supplement purported to enhance male sexual performance. In this appeal, defendants Steven Warshak ("Warshak"), Harriet Warshak ("Harriet"), and TCI Media, Inc. ("TCI"), challenge their convictions stemming from a massive scheme to defraud Berkeley's customers. Warshak and Harriet also challenge their sentences, as well as two forfeiture judgments. 

Given the volume and complexity of the issues presented, we provide the following summary of our holdings: 

(1) Warshak enjoyed a reasonable expectation of privacy in his emails vis-a-vis NuVox, his Internet Service Provider. See Katz v. United States, 389 U.S. 347, 88 S. Ct. 507, 19 L. Ed. 2d 576 (1967). Thus, government agents violated his Fourth Amendment rights by compelling NuVox to turn over the emails without first obtaining a warrant based on probable cause. However, because the agents relied in good faith on provisions of the Stored Communications Act, the exclusionary rule does not apply in this instance. See Illinois v. Krull, 480 U.S. 340, 107 S. Ct. 1160, 94 L. Ed. 2d 364 (1987).