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United States v. Grabosky

August 30, 1982; as amended.

UNITED STATES OF AMERICA, APPELLANT
v.
HOWARD CHRISTINE PERRY GRABOSKY, APPELLEES



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

Author: Becker

Before: GIBBONS, SLOVITER and BECKER, Circuit Judges

Opinion OF THE COURT

BECKER, Circuit Judge.

This appeal presents this court for the first time with the question whether a partially invalid search warrant may be redacted so that evidence obtained pursuant to valid, severable portions of the warrant need not be suppressed. The issue has arisen on the government's appeal from the district court's suppression of all the materials seized pursuant to a warrant which, in the district court's view, authorized a search and seizure exceeding the ambit of the underlying showing of probable cause. After examining the purposes of the warrant requirement and the means by which those purposes are served, we conclude that the practice of redaction is fully consistent with the Fourth Amendment and should be utilized to salvage partially invalid warrants. Because the district court did not consider redaction as an alternative to invalidating the entire warrant and suppressing all the evidence seized thereunder and might have reached a different result had it done so, we vacate the suppression order and remand for further proceedings.

I.

On November 28, 1979, the United States, in pursuit of a search warrant, presented a United States Magistrate in the District of New Jersey with the affidavit of Richard Scott, an investigator of the Inspector General's Office of the Department of Housing and Urban Development [HUD]. Scott had been assigned to investigate allegations of fraud in HUD's Title I Home Insurance Program. In his affidavit, Scott conveyed information provided him by Phillip Lake and Henry Keiser about a scheme in which appellees Howard Christine and Perry Grabosky, the owners of Landmark Builders, Inc., allegedly fraudulently procured HUD Title I Home Improvement Loans for uncreditworthy individuals. According to Lake, Christine and Grabosky obtained these loans by bribing Glenwood Rapf, the loan officer for the HUD Title I program at Collective Federal Savings and Loan Assocation. Scott also related that Keiser had told him "that he was informed by Christine and Grobosky [sic] that they only intended to run Landmark Builders, Inc. for a short period of time and that before the company went out of business, they intended to increase their lines of credit with various of their creditors, deplete their assets and leave the company destroyed."

On the basis of the Scott affidavit, the magistrate issued a warrant authorizing any postal inspector to search the Absecon, New Jersey, offices of Landmark Builders, Inc., and to seize the following property as described by the warrant:

(a) all folders and all documents contained therein and all other documents relating to home improvements and home improvement contracts pursuant to the HUD Title I Insured Home Inprovement Loan program;

(b) all checks, check stubs and bank statements, deposit slips and withdrawal slips, reflecting the receipt and disbursement of funds through Landmark Builders, Inc. for the period January 1, 1977 to the present;

(c) all general ledgers, general journals, cash receipt disbursement ledgers and journals for the period January 1, 1977 to the present;

(d) all correspondence to and from and submissions to Collective Federal Savings and Loan; and

(e) all other documents, papers, instrumentalities and fruits of the crime of submission of false statements in connection with the HUD Title I Insured Home Improvement Loan program as well as any evidence of a scheme to defraud HUD or Collective Federal Savings and Loan or any other creditor by use of the United States mails.

A postal inspector conducted the search the following day. The return of the warrant reveals that he seized prospective, active, and completed job folders; bank statements and check stubs for 1978 and 1979; a customer list; receipts; deposit slips; a job completion summary; two lease agreements and accompanying cover letter; a loan fee receipt; "salesman records"; job summary costs; an income statement; a cash disbursements journal; a writing entitled "Correct Way To Do Business"; a lunch receipt; and a letter to the press.

On December 10, 1980, a federal grand jury returned a ten-count indictment charging Christine and Grabosky with conspiring to violate and violating 18 U.S.C. ยง 657 (1976), by causing Rapf knowingly and wilfully to misapply funds with the intent to injury and defraud Collective. In a related case, Rapf pleaded guilty to conspiring with Christine and Grabosky to make false statements in loan applications submitted to Collective. No other charges have been brought against Christine, Grabosky, or Rapf.

Prior to trial, Christine and Grabosky moved for suppression of the property seized pursuant to the search warrant. The district court ruled that Scott's affidavit established probable cause only to believe that Christine and Grabosky "had bribed one individual at a particular savings institution to approve certain specific loan applications submitted by particular uncreditworthy individuals," United States v. Christine, 563 F. Supp. 62, 65 (D.N.J. 1983), and that evidence thereof would be found among the relevant records at appellees' office. Finding that the warrant's scope of authorization -- a search and seizure of virtually all of the corporation's records within the last few years preceding the date of the search -- was impermissibly broad in light of the probable cause showing that had been made and therefore failed to satisfy the particularity requirement of the Fourth Amendment, the district court suppressed all the material seized pursuant to the warrant.

The United States moved for reconsideration. It argued that the Scott affidavit established probable cause to believe that appellees were engaged in the federal crimes of conspiracy, bankruptcy fraud, and aiding and abetting the misapplication of savings and loan institution funds. On the basis of that putative probable cause showing, the government argued that the scope of the warrant's authorization was not overboard. The district court, however, declined to reconsider its previous ruling. It ruled that the Scott affidavit had not established probable cause to believe that bankruptcy fraud had been committed and that, even if such probable cause had been shown, it did not provide "carte blanche for the seizure of virtually all of the business records of the corporation over a four year period." United States v. Christine, Crim. No. 80-416, slip op. at 3 (D.N.J. May 13, 1981). The United States has appealed the order denying its motion for reconsideration.

In this appeal, the United States contends that the warrant satisfied the particularity requirement of the Fourth Amendment and was not invalid as a general warrant. It argues that generic description of the items to be seized (e.g., "folders," "checks," and "general ledgers") is an acceptable and constitutionally valid practice. It further argues that the generic descriptions were limited through modification by the final clause of the warrant authorizing seizure of "all other documents, papers, instrumentalities and fruits of the crime[s]. . . ." The government also argues that complete suppression was improper because, even if some portions of the warrant were overbroad, other portions of the warrant were valid and the evidence seized pursuant to the valid portions of the warrant should not have been suppressed. Finally, the government argues that the Scott affidavit established probable cause to believe that appellees' entire business was fraudulent and, therefore, that probable cause existed to seize all the records of Landmark Builders.

Appellees submit that the district court's ruling was correct. Additionally and alternatively, they argue that the warrant is also invalid because it was a general warrant and because the ...


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