Free Order on Motion to Suppress - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Judge Robert E. Blackburn Criminal Case No. 04-cr-00103-REB UNITED STATES OF AMERICA, Plaintiff, v. 1. 2. 3. 4. 5. 6. 7. NORMAN SCHMIDT GEORGE ALAN WEED, PETER A.W. MOSS, CHARLES LEWIS, JANNICE McLAIN SCHMIDT, MICHAEL SMITH, and GEORGE BEROS,

Defendants. _____________________________________________________________________ ORDER DENYING NORMAN SCHMIDT'S MOTION TO SUPPRESS EVIDENCE SEIZED PURSUANT TO FOUR SEARCH WARRANTS (Joined by Defendant Lewis) _____________________________________________________________________ Blackburn, J. The matter before me is the Motion To Suppress Evidence Seized Pursuant to Four Search Warrants [#391] filed on April 5, 2005, by defendant, Norman Schmidt.1 I deny the motion.2 In fashioning my ruling I have considered the following: 1) all relevant adjudicative facts in the file and record of this action as developed pro tanto; 2) the four search warrants (including their concomitant attachments) issued by United States

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The m otion is joined by defendant, Charles Lewis. See M inute Order [#1019] entered February

26, 2007. The issues raised by and inherent to the m otion are briefed adequately; thereby, obviating the necessity for evidentiary hearing or oral argum ent.
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Magistrate Judge Craig B. Shaffer in case numbers 03-5085M, 03-5086M, 03-5087M, and 03-5088M on March 6, 2003; 3) the Affidavit in Support of Search Warrant common to all four search warrants; 4) the recovery log and inventory of property seized for each of the four search warrants; and 5) all reasons stated, arguments advanced, and authorities cited by the parties in their papers.3 I. INTRODUCTION The subject of this motion are four search warrants issued March 6, 2003 by United States Magistrate Judge Craig B. Shaffer sitting in the United States District Court for the District of Colorado. The four search warrants are for the following addresses: 1. 5850 East 58th Avenue, Units E & F, Commerce City, Colorado (Attachment A-1). 2. 1400 16th Street, #4015, 16 Market Square Building, Denver, Colorado (Attachment A-2). 3. 250 East 54th Avenue, Suite C, Denver, Colorado (Attachment A-3). 4. 550 East 12th Avenue, Suite 1805, Denver, Colorado (Attachment A-4) Each of these search warrants names the premises and property to be searched by means of an attachment. The attachments are labeled A-1, A-2, A-3 and A-4. Each of the four search warrants recites that there is now concealed in the State and the District of Colorado certain person or property described in an attachment labeled Exhibit B. The property description for which seizure was authorized in Attachment B is the same for each of the four search warrants. The description of property to be seized, is divided into six categories. The first

I take judicial notice of the four search warrants, the warrant affidavit, and the recovery logs of property seized in the execution of the search warrants. My review was lim ited to the "four corners" of those papers.

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category authorizes the seizure of all documents signed by investors and all investment forms, lulling letters, wire transfer instructions and investor statement of account. The second category authorizes the seizure of client or investor lists, international chamber of commerce forms and documents, certificates or insurance, high yield private placement information documents, all writings to and from the person/business entity whose premises is being searched, and any communications between investors, banks, and a list of dozens of people and entities. The third category relates to passport identification numbers of the persons whose premises is being searched together with travel documents such as hotel receipts, rental cars receipts, and telephone records. The fourth category seeks the financial records of the entity of the premises being searched including not only the bank records, accounts receivable and accounts payable, ledgers and journals, but entire computer systems including hard drives, CDROM discs, monitors, printers, and the like which are associated with any one of a dozen different entities. The fifth category relates to the financial instruments of the entity of the premises being searched without limitation including both personal checks and business checks and cash. Finally, the sixth category relates to all indicia of the placement of investor funds in what appears to be accounts or investments at financial institutions. Each of the four search warrants contains the language, I am satisfied that the affidavit(s) and any recorded testimony establish probable cause to believe that the property so described is now concealed on the person or premises above-described and establish grounds for the issuance of this warrant. The affidavit submitted to the magistrate judge is that of FBI Special Agent Stephanie Ann Hahn. The same affidavit was used for each of the four search warrants. The 3

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affidavit itself is a part of a document entitled Application and Affidavit for Search Warrant. The application contains the same premises description with the same attachments A-1 through A-4 designation as do the warrants. The warrant affidavit contains the same labeled Attachment B description of the property to be seized as attached to each warrant. The affidavit alleges, inter alia, that Norman Schmidt and others engaged in a series of three separate Ponzi schemes using various forms of high yield investments through medium term notes or international bank notes by means of a dozen or more different companies. Government agents executed search warrants at the four locations indicated in the Motion to Suppress on March 7, 2003. Those locations shall be identified in this order as "Motorsports"(5850 East 58th Avenue, Units E & F, Commerce City, Colorado); "Capital Holdings Office" (1400 16th Street, # 4015, Denver, Colorado); "Plastics" (250 East 54th Avenue, Suite C, Denver, Colorado); and, "condominium or Penn Square" (550 East 12th Avenue, Suite 1805, Denver, Colorado). The four warrants were issued following the Magistrate Judge's review of a 49page, 55-paragraph supporting affidavit detailing relevant events from June 1, 1999, until February 19, 2003, and involving entities identified as Reserve Foundation Trust, Reserve Foundation, LLC, Smitty's Investments, Capital Holdings, LLC and Monarch Capital Holdings, LLC, as well as those of defendants Schmidt, Weed, Moss, Lewis, Smith, Beros, and unindicted co-conspirators Bergman and Harte. Also attached to the affidavit are investment contracts and forms utilized in the operation of the scheme. In summary, the affidavit describes the conception and operation of an illegal investment scheme under the various corporate names by these individuals from the 4

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summer of 1999, through February of 2003. Identified in the affidavit are numerous persons and entities who solicited investors in the scheme. Identified by attachment to the affidavit is a description of the items to be searched for and seized at the four locations. Further, the affidavit represents that the items sought to be seized are "fruits and instrumentalities and evidence of crimes involving violations of Title 18, United States Code, Sections 371[conspiracy], 1341[mail fraud], 1343 [wire fraud], 1956 and 1957 [money laundering], and Title 15, United States Code, Sections 77q(a) and 77x and sections 78j(b) and 78ff [securities fraud]." II. THE MOTION Defendant seeks the entry of an order suppressing all evidence seized from the execution of the four search warrants issued by Magistrate Judge Shaffer on March 6, 2003. See Motion at 1. Defendant contends that the evidence was seized in violation of the Fourth Amendment to the United States Constitution. See Id. Specifically, defendant contends 1) that the warrants are facially over broad, see id. at 5-7, ¶ A; 2) that the warrants are not supported by probable cause because of deficiencies in the warrant affidavit common to all of the search warrants, see id. at 713, ¶ B; 3) that the execution of the warrants was unreasonable, see id at 14-15, ¶ C; and 4) that the good faith exception to the exclusionary rule is inapposite, see id. at 15, ¶ D. Concerning defendant's claim that the warrants are not supported by probable cause because of deficiencies in the warrant affidavit common to all of the search warrants, defendant contends further that there are ". . . five primary deficiencies in the

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affidavit submitted to the magistrate judge . . . ." See Id. at 7, ¶ B. Defendant claims that the five deficiencies are as follows: 1) that the warrant affidavit fails to identify with particularity which items to be seized are located at which location, see id. at 9, ¶ 1; 2) that the affidavit contains stale information, see id. at 10, ¶ 2; 3) that the affidavit contains contradictory information, see id. at 12, ¶ 3; 4) that the affidavit contains conclusory information, see id at 13, ¶ 4; and 5) that the information from confidential informants is based on unidentified hearsay, see id. at 13, ¶ 5.4 III. STANDARD OF REVIEW A. The Fourth Amendment The Fourth Amendment to the United States Constitution requires as follows: Searches and seizures regulated. The right of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures shall not be violated; and no warrant shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. U.S. CONST. amend. IV. Two principal requirements exist for search warrants: "probable cause supported by an oath or affirmation and a particular description of the place, persons and things to be searched and seized." United States v. Mesa-Rincon, 911 F.2d 1443, 1436 (10th Cir. 1990); see also United States v. Harris, 903 F.2d 770, 774-75 (10th Cir.1990).

Because of the im precise concatenation between the issues enum erated in defendant's m otion under the rubric of "Issues Presented," see Motion at 4, and under "Argum ent and Applicable Law," see id. at 5-15, I have organized m y analysis around the issues raised and argum ents presented by defendant under his heading "Argum ent and Applicable Law," because it presents and preserves defendant's position in the broadest term s.

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IV. ANALYSIS A. Whether On Its Face The Warrants Are Unconstitutionally Over Broad Defendant first argues that the search warrants are unconstitutionally over broad on their face. See Motion at 5, ¶ A. Defendant claims that the search warrants contained no limitations on the business records, which could be seized. See Id. at 7. As an example, defendant contends that it was clear from the seizure of the computers and computer hard drives that the officers could not properly distinguish between items that may or may not be seized, but instead, were authorized by the warrants to seize and search everything. See Id. I disagree. The description of the items to be searched and seized meets Fourth Amendment requirements for specificity. The six categories enumerated in the attachment to the affidavit and the warrant direct the executing agents to seize: A) All documents signed by clients/investors; B) Client or investor lists, International Chamber of Commerce forms and documents, Certificates of Insurance, High Yield Private Placement information documents, all writings to and from the person or entity whose premises is being searched and client/investors, communications between investors, banks and brokers/agents, "electronic" and U.S. Mail between the principals named below and bankers, brokers and agents, Western Union Money Transfers, and private or commercial interstate express mail carrier receipts; C) Passport identification numbers of the person(s) whose premises is being searched, national and international travel documents, address books, telephone lists, Rolodex, Palm Pilot and/or organizational planners, telephone monthly statements, and long distance telephone

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records; (D) Financial records of the person/business entity of the premises being searched, computer systems associated with certain named entities; E) Financial instruments of the person/business entity of the premises being searched; F) All indicia of placement of investor funds in accounts or investments. Virtually all of the above categories have examples of the types of things that would fall into the category of items to be seized. A warrant meets the Fourth Amendment particularity requirement when it enables those executing the warrant to reasonably ascertain and identify the things authorized to be seized. United States v. Harris, 903 F.2d 770, 775 (10th Cir. 1990). The use of generic or broad descriptions of the items to be seized has been found to be appropriate when justified by the circumstances. United States v. Le, 173 F.3d 1258, 1271-1272, 1275 (10th Cir. 1999). This is true because the courts have recognized that investigation of complex white collar crimes requires a greater degree of flexibility to piece together the prodigious "paper puzzle." United States v. Waugneux, 683 F. 2d 1343, 1349 (11th Cir.1982). This is particularly true where the crime investigated is likely to require examination of virtually all of the records of a particular business. United States v. Humphrey, 104 F.3d 65, 69, (5th Cir. 1997). The description of the items to be searched for, as set forth in the attachments to the warrants and concomitant warrant affidavit, when considered within the context of this complex, massive, and far-reaching white collar fraud, is legally sufficient. As noted in Le, 173 F.3d at 1275, "It is difficult to imagine how the . . . warrant could have been phrased more specifically."

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Both cases relied on by the defendant are factually distinguishable from the instant case. Voss v. Bergsgaard, 774 F.2d 402 (10th Cir. 1985) involved an investigation of a tax fraud scheme "grafted" onto a legitimate commodities trading business. The warrant, however, did not limit itself to evidence relating to tax fraud. Nor did the Government's affidavit in support of the warrant provide information that tax fraud pervaded every aspect of the business. Subsequent Tenth Circuit authority seemingly limits the holding in Voss to those situations where the affidavit does "not pinpoint the statutes violated" or establish that "the alleged crime permeated the business." United States v. Lamport, 787 F.2d 474, 476 (10th Cir. 1986). In United States v. Leary, 846 F.2d 592 (10th cir. 1988), the warrant affidavit recited a single transaction by an otherwise legitimate export business, involving the export of technical equipment to China, which single transaction the affiant alleged to have been in violation of the Arms Export Control Act. The warrant affidavit did not allege an illegal export scheme involving other companies, countries, or commodities. The warrant itself called broadly for the seizure of records relating to the purchase, sale, and illegal exportation of materials in violation of the Act. When executed, the agents seized twenty boxes of records relating to sales throughout the world, employment applications, life insurance policies, and correspondence related to other business ventures of one of the principals. The Leary court's objections to the warrant are founded on the issuing court's allowance of seizure of any items evidencing a "violation of the Arms Export Control Act, . . . and the Export Administration Act . . ." as the only limitation. Leary, 846 F.2d at

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601. The court distinguished as "more specific" the language approved in other opinions advanced by the Government as analogous. Id. Those opinions involved descriptors equally or less specific than those set forth in Exhibit B to the instant warrants. See United States v. Lamport, 787 F.2d at 476; United States v. Waugneux, 683 F.2d at 1350 n.5. Leary has been distinguished by the Third Circuit from cases involving schemes where the range of information required to unravel the ". . . scheme and the extent of the participation of the parties . . ." was more complex. United States v. American Investors of Pittsburg, Inc., 879 F.2d 1087, 1106 (3rd Cir. 1989). In American Investors the warrant in question was as specific as circumstances allowed in light of the breath, scope, duration, and number of participants described in the warrant affidavit. The Constitution requires no more. Assuming, arguendo, that a warrant provided for the de facto seizure of all records, the warrant may still satisfy the requirements of the Fourth Amendment where probable cause supports a conclusion that the entire business was merely a sham to facilitate the scheme to defraud. See, e.g., Williams v. Kunze, 806 F.2d 594, 598 (5th Cir. 1986); see also United States v. Webster, 734 F. 2d 1048, 1055 (5th Cir.), cert. denied, 469 U.S. 1073(1984). This is particularly true in cases of conspiracy where the evidence "is often hidden in the day-to-day business transactions among the involved entities. . ." Kitty's East v. United States, 905 F.2d 1367, 1374-75, 1374 n. 6 (10th Cir. 1990) (sustaining a warrant to search nearly every business record on the premises of an adult entertainment establishment and distinguishing Voss and Leary).

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See also Le ,173 F.3d at 1276. The warrant affidavit in question here establishes clearly that Schmidt was operating an investment scam of immense proportions with no apparent legitimacy to any part of its facets. Thus, the four search warrants here are not facially over broad. B. Whether The Scope Of The Warrants Was Not Supported By Probable Cause Because Of Affidavit Deficiencies Under this rubric defendant argues "[t]here are five primary deficiencies in the affidavit submitted to the magistrate judge to support these search warrants. [1] Many of the individual paragraphs submit factual information without a reliable source for that information. [2] Key paragraphs are information related by a confidential informant whose information must be based on unidentified hearsay. [3] Some of the paragraphs contain conclusory information for which there is not a corresponding supporting factual underpinning. [4] Much of the information is stale. [5] Some of the facts submitted to the magistrate are contradicted by other facts submitted to the magistrate. See Motion at 7-8, ¶ B. Defendant's assertions to the contrary, I conclude that the warrant affidavit, which is detailed, reticulated, and circumstantiated, established probable cause to search the premises for the things sought to be seized as described in each of the four search warrants. In determining whether a search warrant is supported by probable cause, a court "reviews the sufficiency of the affidavit upon which a warrant is issued by looking at the totality of the circumstances and simply ensuring 'that the magistrate had a substantial basis for concluding that probable cause existed.' " United States v. Tisdale, 248 F.3d 964, 970 (10th Cir.2001) (quoting Illinois v. Gates, 462 U.S. 213, 238-39, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983)). Probable cause exists "only when the supporting affidavit sets forth facts that would lead a prudent person to believe there is a fair 11

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probability that contraband or evidence of a crime will be found in a particular place." Basham, 268 F.3d at 1203; see also United States v. Jardine, 364 F.3d 1200, 12041205 (10th Cir. 2004). "Finely-tuned standards such as proof beyond a reasonable doubt or by a preponderance of the evidence, useful in formal trials, have no place in the magistrate's decision." Gates, 462 U.S. at 235, 103 S.Ct. 2317. See also United States v. Artez, 389 F.3d 1106, 1111 (10th Cir.2004). "In assessing whether a search warrant is supported by probable cause, a magistrate's determination of probable cause must be given considerable deference." United States v. $149,442.43 in United States Currency, 965 F.2d 868, 872 (10th Cir.1992) (citing Illinois v. Gates, 462 U.S. 213, 236, 103 S.Ct. 2317, 2331, 76 L.Ed.2d 527 (1983); see also United States v. Corral-Corral, 899 F.2d at 931; United States v. Peveto, 881 F.2d 844, 850 (10th Cir.), cert. denied, 493 U.S. 943, 110 S.Ct. 348, 107 L.Ed.2d 336 (1989). 1. Whether The Affidavit Fails To Identify With Particularity Which Books And Records, Client Lists, And Other Items Which May Be Seized Are Located At A Particular Location The gravamen of defendant's argument is that the warrant affidavit, which was used in support of all four search warrants, did not establish probable cause to believe that all of the items described in Attachment B to the warrant affidavit would be found at each of the four separate locations to be searched. See Motion at 8-10. Defendant's argument implicates the particularity requirement of the Fourth Amendment. The information in the affidavit establishes probable cause to believe that there existed a conspiracy with a large number of geographically widespread conspirators, co-conspirators, and agents. Within Colorado the affidavit established that Schmidt,

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Lewis, McLain, and others were running the investment scheme from the four locations searched. See Affidavit ¶ ¶ 4, 6, 16Aii, 18F, 22 A&C, 31, 32, 33B, 34, 35, 36, 36B, 37, 39, 40B, J, N, O, P, & Q, 41, 42, 43, and 50. In order to operate the scheme from those locations, there is a reasonable inference that can be drawn from the warrant affidavit that the items or classification of items described in the warrants would be present at those locations. For example, in order to conduct the business of the conspiracy, it is logical that investment contracts would be kept in any location where the business of the conspiracy was being conducted. Likewise, correspondence related to the investment scheme ­ whether by mail, fax, email, or otherwise ­ is a necessary part of communicating with the geographically widespread client base concerning the status of investments and with the far flung net work of co-conspirators and agents necessary to perpetuate the existence and success of the conspiracy. Nowhere has the defendant provided authority to substantiate his assertion that the government must show that a particular item of evidence is at a particular location. Instead, the government must only provide the magistrate with probable cause to believe that a crime has been committed and that evidence of that crime is at the location to be searched. Andresen v. Maryland, 427 U.S. 463, 482 (1976). 2. Whether The Affidavit Contains Stale Information Defendant asserts essentially that given the dates of the commencement and termination of the various business entities used to perpetrate the various crimes charged and given the inherent limitations of the cooperating witness' knowledge, some

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of the critical information presented to the magistrate judge was stale, and, therefore, unusable in the probable cause calculus. See Motion at 10-12. I disagree. "Probable cause to search cannot be based on stale information that no longer suggests that the items sought will be found in the place to be searched." United States v. Snow, 919 F.2d 1458, 1459 (10th Cir.1990). "The determination of timeliness, however, does not depend on simply the number of days that have elapsed between the facts relied on and the issuance of the warrant; instead, whether the information is too stale to establish probable cause depends on the nature of the criminal activity, the length of the activity, and the nature of the property to be seized." Id. at 1460 (internal quotations omitted). Where the offense in question is ongoing and continuing, the passage of time is not of critical importance. United States v. Mathis, 357 F.3d 1200, 1207 (10th Cir.2004); United States v. Le, 173 F.3d 1258, 1267 (10th Cir.1999); United States v. Jardine, 364 F.3d 1200, 1205 (10th Cir. 2004). Schmidt's assertion that the facts in the affidavit are too old to constitute probable cause, is based on the erroneous assertion that the cessation of use of a specific entity or business name to conduct the scheme operates as a cessation of activities. Here, the warrant affidavit established clearly that the same scheme (regardless of the name used) is operated continuously from 1999 to 2003. Schmidt incorporated Smitty's in April of 2000, while the Reserve Foundation is still accepting investments. Affidavit ¶ 29. Starting in May of 2000, the remaining funds of the Reserve Foundation were transferred directly into a new account created for Smitty's. Affidavit ¶ 25. Investors Peterson, Jarman, and Schreiber were pitched

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essentially the same investment as that of the Reserve Foundation. Affidavit ¶¶ 31, 32, 33, and 34. Information provided by the cooperating witness as of November of 2002, confirmed that although the scheme is now operated under the name Capital Holdings, the investment, structure, and persons involved were similar if not identical. The only difference is that the scope has expanded exponentially. Affidavit ¶ 40. On February 19, 2003, Schmidt and Lewis meet with an undercover Federal Bureau of Investigation ("FBI") agent for the purpose of soliciting an investment. The description of the meeting and the document provided to the agent (Attachment F to the affidavit) confirm that the defendants were marketing essentially the same investment scheme that existed in 1999. Moreover, as late as January of 2002, Harte stated under oath at his deposition that the records of the Reserve Foundation were still being maintained at the Penn Square location, evidencing an intent to preserve those records. Affidavit ¶ 22C. Where, as here, the activity is "on-going and refreshed", even if some of the information is from years earlier, the warrant is not stale. United States v. Green, 250 F.3d 471, 480 (6th Cir. 2001), United States v. Adames, 56 F.3d 737, 748 (7th Cir. 1995). Schmidt argues collaterally that it is inconsistent for Schmidt to maintain the business records of Capital Holdings at both Plastics and Motorsports locations. That is an assertion that is unsupported. The Suspicious Activity Report filed by Wells Fargo in January of 2003, states that Capital Holdings has a bank account on which the account holder had a business address at the Plastics location. Affidavit ¶ 37. McLain was listed also as the registered agent for Monarch Capital Holdings and Fastrack at the same address. Affidavit ¶37. According to the Wyoming Secretary of State,

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Monarch had its business mailing address at the same location. Affidavit ¶ 39. The cooperating witness's detailed knowledge about the operation and its local and out of state offices suggests strongly that she would have knowledge of other locations out of which Schmidt conducted the investment scheme. Affidavit ¶ 40 O, P. This is corroborated by Lewis providing his business card to the FBI undercover agent on February 19 with the Motor Sports address. Affidavit ¶ 50. The information on which the warrant affidavit is based is not unconstitutionally stale. 3. Whether The Affidavit Contains Contradictory Information Schmidt asserts that maintenance of records at four business locations "does not follow logically or factually," from the more general use of those four business locations, requiring the magistrate to decline to find probable cause until the agent "cleans up her affidavit" Motion pages 12, 13. Schmidt cites no authority to support his novel proposition. Likewise, neither magistrates nor the government should be in the business of sanitizing inconsistencies when they legitimately exist. If true, the inclusion of those unadulterated facts is beneficial for the magistrate in making his determination. Facts in the affidavit corroborate the information that Schmidt was using four locations in conducting the scheme. See Affidavit ¶¶ 4, 6, 18F, 22C, 31, 33B, 34, 35, 36B, 37, 39, 41, 42, 43, and 50. The claim of illogic is the product of an idiosyncratic system of logic, not an Aristotelian one. 4. Whether The Affidavit Contains Conclusionary Information Defendant contends that there are four paragraphs in the warrant affidavit that

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state the affiant's conclusions, which are not factually supported in the affidavit. Paragraph 2, 3 and 4 of the affidavit as well as paragraph 54 contain the affiant's conclusions. Additional conclusions are interspersed throughout the affidavit. These conclusions can only be considered by the magistrate issuing the warrant if the magistrate, making an independent reading of the facts contained in the affidavit, can determine that those facts support the agent's conclusions. It is submitted that the conclusions reached by the agent are not supported by the reliable and usable "facts" stated by her in the affidavit. See Motion at 13, ¶ 4. There are a limited number of conclusory statements in the warrant affidavit, which statements are included for the specific and useful purpose of giving the reviewing magistrate an overview of the facts and circumstances later included. However, those statements are all supported by facts later enumerated in the affidavit. Thus, the inclusion of these statements does not affect the validity of the magistrate's determination of probable cause. 5. Whether Some Of The Information Provided By Cooperating Witnesses Is Usable To Determine Probable Cause Defendant claims that paragraphs 20 and 40 of the warrant affidavit recite key information provided by two, unidentified, cooperating witnesses whose statements inherently involve hearsay from an unknown source whose reliability is unknown and inscrutable. See Motion at 13, ¶ 5. The warrant affidavit contains information concerning the basis for the knowledge of the two unidentified, cooperating witnesses. Affidavit ¶¶ 20 and 40. The level of detail of the information provided by both cooperating witnesses, standing alone is strongly suggestive of a basis of knowledge and reliability of the information. The great balance of the information contained in the

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warrant affidavit, independent of these cooperating witnesses, substantiates and corroborates their information and the magistrate's decision to issue the search warrants. In this case the totality of the circumstances supports the reliance of the magistrate on the information provided by the unidentified witnesses. Gates v. Illinois, 462 U.S. 213, 230-231(1982). C. Whether Execution Of The Search Warrants Was Unreasonable In this section of his argument, defendant contends that execution of the search warrants was constitutionally unreasonable, because many items, which defendant identifies in his motion, were seized without having been identified in the warrants. See Motion at 14, ¶ C. While this appears to be a rehashing of the constitutional over breadth argument, it illustrates that the items enumerated in the motion do fall within the scope of the warrants. Set forth below is the relevance of each of the items questioned; 550 E. 12th Avenue, Suite 1805: U.S. Bank Statements: Affidavit ¶40 Qiig (2.5 million dollar deposit by Schmidt to U.S. Bank) Warrant Attachment B, paragraph D. Cuyahoga County Lawsuit Documents: Documents relating to this law suit were to lull Investors in Golden Leaf Investments. See 404(b) Notice. Shalako Inn Documents: Warrant authorized seizure of fruits of crime. Documents in question related to potential investment of investor monies. $3000 in cash: Warrant authorized seizure of fruits of crime.

Compacq Lap Top Computer: Warrant Attachment B, paragraph D; Warrant

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authorized seizure of fruits of crime. 5850 E. 58th Avenue, Units E & F Lou DeFranco Passport: DeFranco is the name used by the undercover FBI agent who met with Schmidt and Lewis in Chicago on February 19, 2003. DC-9 Information: Warrant authorized seizure of fruits of crime. Documents in question related to potential investment of fruits of crime. Kriselle Correspondence: Kriselle Foundation was an investor in the investment scheme through Monarch Capital Holdings. Hard-drive Computer: Search Warrant Attachment B, Paragraph D.

250 E. 54th Avenue, Suite C Closing Paperwork (Condominum): Warrant authorized seizure of fruits of crime. Documents in question related to potential fruit of crime. Plainview National Bank Information: Warrant Attachment B, Paragraph D. Warrant authorized seizure of fruits of crime. Documents in question related to potential fruit of crime. Safe Deposit Lease: Warrant Attachment B. Paragraph D. Warrant authorized seizure of fruits of crime. Document in question related to potential fruit of crime. NASCAR Trips Folder: Warrant Attachment B, Paragraph C.

1400 16TH STREET, #4105 2002 Pickup Title: Warrant authorized seizure of fruits of crime.

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Directory Books: Two Computers:

Warrant Attachment B, Paragraph C. Warrant Attachment B, Paragraph D. Warrant also authorized seizure of fruits of crime. V. CONCLUSION

Based on the foregoing analysis and on the totality of relevant circumstances, I conclude ultimately that neither the probable cause nor particularity requirements of the Fourth Amendment were violated either in the issuance or execution of the four search warrants issued by Magistrate Judge Shaffer on March 6, 2003. In making his determination of probable cause, Magistrate Judge Shaffer did not rely on unconstitutionally inexplicit, stale, contradictory, conclusory, or incompetent information. Thus, defendant's motion should be denied.5 VI. ORDERS THEREFORE, IT IS ORDERED that the Motion To Suppress Evidence Seized Pursuant to Four Search Warrants [#391] filed on April 5, 2005, by defendant, Norman Schmidt, IS DENIED.6 Dated March 26, 2007, at Denver, Colorado. BY THE COURT: s/ Robert E. Blackburn Robert E. Blackburn United States District Judge

My findings and conclusions obviate the need to determ ine whether the good faith exception to the exclusionary rule under United States v. Leon, 468 U.S. 897, 915, 104 S.Ct. 3405, 3416, 82 L.Ed.2d 677 (1984) applies. Thus, I do not address defendant's claim that the good faith exception is inapposite. See Motion at 15, ¶ D. This is one of the m otions that at the com m encem ent of the Trial Preparation Conference on March 2, 2007, I announced would be denied by written order, which I had dictated, but not then finalized.
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