The opinion of the court was delivered by: Politan, District Judge.
THE ORIGINAL OF THIS LETTER OPINION AND ORDER IS ON
FILE WITH THE CLERK OF THE COURT
This matter comes before the Court on Defendant Nicodemo S. Scarfo's
("Scarfo") pretrial motion for discovery and suppression of evidence. The
Court heard oral argument on July 30, 2001 and again on September 7,
2001. Co-defendant Frank Paolercio ("Paolercio") joined in the motion.
The government thereafter moved to invoke the Classified Information
Procedures Act. For the following reasons, the Defendants' motion for
discovery is granted in part and denied in part, and the motion to
suppress evidence is denied.
This case presents an interesting issue of first impression dealing
with the ever-present tension between individual privacy and liberty
rights and law enforcement's use of new and advanced technology to
vigorously investigate criminal activity. It appears that no district
court in the country has addressed a similar issue. of course, the matter
takes on added importance in light of recent events and potential
national security implications.
The Court shall briefly recite the facts and procedural history of the
case. Acting pursuant to federal search warrants, the F.B.I. on January
15, 1999, entered Scarfo and Paolercio's business office, Merchant
Services of Essex County, to search for evidence of an illegal gambling
and loansharking operation. During their search of Merchant Services, the
F.B.I. came across a personal computer and attempted to access its
various files. They were unable to gain entry to an encrypted file named
Suspecting the "Factors" file contained evidence of an illegal gambling
and loansharking operation, the F.B.I. returned to the location and,
pursuant to two search warrants, installed what is known as a "Key Logger
System" ("KLS") on the computer and/or computer keyboard in order to
decipher the passphrase to the encrypted file, thereby gaining entry to
the file. The KLS records the keystrokes an individual enters on a
personal computer's keyboard. The government utilized the KLS in order to
"catch" Scarfo's passphrases to the encrypted file while he was entering
them onto his keyboard. Scarfo's personal computer features a modem for
communication over telephone lines and he possesses an America Online
account. The F.B.I. obtained the passphrase to the "Factors" file and
retrieved what is alleged to be incriminating evidence.
On June 21, 2000, a federal grand jury returned a three-count
indictment against the Defendants charging them with gambling and
loansharking. The Defendant Scarfo then filed his motion for discovery
and to suppress the evidence recovered from his computer. After oral
argument was heard on July 30, 2001, the Court ordered additional
briefing by the parties.
In an August 7, 2001, Letter Opinion and Order, this Court expressed
serious concerns over whether the government violated the wiretap statute
in utilizing the KLS on Scarfo's computer. Specifically, the Court
expressed concern over whether the KLS may have operated during periods
when Scarfo (or any other user of his personal computer) was
communicating via modem over telephone lines, thereby unlawfully
intercepting wire communications without having applied for a wiretap
pursuant to Title III, 18 U.S.C. § 2510.
As a result of these concerns, on August 7, 2001, this Court ordered
the United States to file with the Court a report explaining fully how
the KLS device functions and describing the KLS technology and how it
works vis-á-vis the computer modem, Internet communications,
e-mail and all other uses of a computer. In light of the government's
grave concern over the national security implications such a revelation
might raise, the Court permitted the United States to submit any
additional evidence which would provide particular and specific reasons
how and why disclosure of the KLS would jeopardize both ongoing and
future domestic criminal investigations and national security interests.
The United States responded by filing a request for modification of
this Court's August 7, 2001, Letter Opinion and Order so as to comply
with the procedures set forth in the Classified Information Procedures
Act, Title 18, United States Code, Appendix III, § 1 et seq.
("CIPA"). This request, of course, presented a new wrinkle into what had
been an already intriguing case. Defendant Scarfo objected to the
government's request, alleging that the United States did not make a
sufficient showing that the information concerning the KLS had been
In response to Scarfo's objection, the United States submitted the
affidavit of Neil J. Gallagher, Assistant Director, Federal Bureau of
Investigation, dated September 6, 2001. In his affidavit, Mr. Gallagher
stated that the characteristics and/or functional components of the KLS
were previously classified and marked "SECRET" at or around November
The Court heard oral argument on September 7, 2001, to explore whether
the government may invoke CIPA and, specifically, whether the government
had classified the KLS. Although the defense conceded that the KLS was
classified for purposes of CIPA,*fn1 the Court reserved on that question
and ordered the government to provide written submissions to the Court.
The government then filed an ex parte, in camera motion for the Court's
inspection of the classified material.
On September 26, 2001, the Court held an in camera, ex parte hearing
with several high-ranking officials from the United States Attorney
General's office and the F.B.I. Because of the sensitive nature of the
material presented, all CIPA regulations were followed and only those
persons with top-secret clearance were permitted to attend. Pursuant to
CIPA's regulations, the United States presented the Court with detailed
and top-secret, classified information regarding the KLS, including how
it operates in connection with a modem. The government also demonstrated
to the Court how the KLS affects national security.
After reviewing the classified material, I issued a Protective Order
pursuant CIPA on October 2, 2001, wherein I found that
the government could properly invoke CIPA and that the government made a
sufficient showing to warrant the issuance of an order protecting against
disclosure of the classified information. The October 2, 2001, Protective
Order also directed that the government's proposed unclassified summary
of information relating to the KLS under Section 4 of CIPA would be
sufficient to allow the defense to effectively argue the motion to
suppress. Accordingly, the Protective Order permitted the government to
provide Scarfo with the unclassified summary statement in lieu of the
classified information regarding the KLS. Pursuant to Section 6(d) of
CIPA, the Court also sealed the transcript of the September 26th ex
parte, in camera hearing and the government's supporting Affidavits. The
government filed with the Court and served on Scarfo the unclassified
summary on October 5, 2001, in the form of an October 4, 2001, Affidavit
of Randall S. Murch, Supervisory Special Agent of the Federal Bureau of
Investigation, Laboratory Division (the "Murch Affidavit").
Having the benefit of the September 26th ex parte, in camera hearing
and the many supplemental submissions of the parties, the Defendants'
motion for discovery and suppression is now ripe for resolution.
Defendants Scarfo and Paolercio advance several arguments in moving to
suppress certain evidence seized by the FBI. The Defendants first contend
that the KLS constituted an unlawful general warrant in violation of the
Fourth Amendment to the Constitution. In addition, the Defendants, after
reviewing the government's unclassified summary, i.e., the Murch
Affidavit, argue that the Murch Affidavit is inadequate under CIPA and
would conflict with the United States Supreme Court decision of Jencks
v. United States, 353 U.S. 657, 77 S.Ct. 1007, 1 L.Ed.2d 1103 (1957).
Lastly, Defendants urge the Court to suppress the evidence because the
KLS effectively intercepted a wire communication in violation of Title
III, 18 U.S.C. § 2510.
Scarfo argues that since the government had the ability to capture and
record only those keystrokes relevant to the "passphrase" to the
encrypted file, and because it received an unnecessary overcollection of
data, the warrants were written ...