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In re Search Warrants of VS2 Worldwide Communications, L.L.C.

Superior Court of New Jersey, Appellate Division

December 20, 2013



Submitted October 21, 2013

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. M-2013-501.

Jack Venturi, and Mark E. Schamel (Womble, Carlyle Sandridge and Rice, LLP) of the Ohio Bar, admitted pro hac vice, attorneys for appellants VS2 Worldwide Communications, L.L.C., and P&E Technologies, Inc. (Mr. Venturi on the brief).

Christopher J. Gramiccioni, Acting Monmouth County Prosecutor, attorney for State of New Jersey, (Mary R. Juliano, Special Deputy Attorney General, Acting Assistant Prosecutor, of counsel and on the brief).

Before Judges Ashrafi and Leone.


Appellants are two New Jersey corporations, VS2 Worldwide Communications, L.L.C., and P&E Technologies, Inc. They challenge search warrants issued in New Jersey in aid of a criminal prosecution of them and their principals in the State of Ohio. The Law Division denied appellants' emergent motion for return of the property that was seized pursuant to the search warrants. We affirm.

Appellants have engaged in the business of selling products and licensing computerized sweepstakes games used in internet cafés in Ohio and other states. Appellants' offices and facilities are located in Monmouth County in this State. A principal of the two corporations is Philip Cornick, a resident of Jackson, New Jersey.

The State of Ohio alleges that Cornick and his corporations engaged in illegal gambling and money laundering by means of their internet café activities, and Ohio sought search warrants to aid in their prosecution. Appellants contend that the search warrants were obtained through a fraud upon the New Jersey court that issued them, and that the property seized pursuant to the warrants should be immediately returned to them, and also that the New Jersey prosecutor and detective who obtained the warrants should be sanctioned.

In May 2012, appellants and their principals were indicted in Ohio for gambling and other related offenses. The charges involved the sale of "network access time" in Ohio internet cafés that could be used in conjunction with entries into "sweepstakes" that resemble casino games. Appellant P&E Technologies sold the game equipment and computer hardware used in the sweepstakes. Appellant VS2 developed and distributed the software for the sweepstakes games. VS2 receives proceeds through licensing of its software and network access time.

Ohio investigators allege that the purchase of network access time by participants in the sweepstakes was a façade for gambling activity. They allege that internet café patrons would get credits in an account for network access time they purchased, which credits could be wagered on games of chance, and patrons would be paid cash by the internet café for winning games. Ohio alleges that facilitation of this activity violates its gambling and money laundering laws.

The application for search warrants stated that the Ohio business operations of VS2 and P&E Technologies were remotely conducted from locations in New Jersey. Mail was routinely sent from internet cafés in Ohio to VS2's place of business in Farmingdale, New Jersey, and money was wired to bank accounts associated with VS2 and Cornick.

In April 2013, Ohio prosecutors sought the cooperation of New Jersey law enforcement authorities to gather evidence pertaining to the Ohio case. They provided their information to the Monmouth County Prosecutor's Office and requested assistance in obtaining and executing search warrants for VS2's facility and Cornick's home and car.

A detective employed by the Monmouth County Prosecutor's Office applied for the search warrants. The affidavit supporting probable cause described the facts of the Ohio investigation and referenced the Ohio criminal statutes that were allegedly violated. However, the affidavit also stated incorrectly that the investigation involved violations of New Jersey laws. In fact, VS2 did not operate its sweepstake games in New Jersey, and no New Jersey investigation was taking place.

The Superior Court of New Jersey issued the requested search warrants. The warrants were executed several days later by law enforcement officers of the Monmouth County Prosecutor's Office accompanied by Ohio investigators. The authorities seized various items including bank receipts, money, cell phones, computers, and electronic data storage items. The seized property was immediately transported to prosecuting authorities in Ohio.

The next day, appellants filed a motion for emergent relief in the Superior Court of New Jersey seeking return of the seized items. Appellants argued that the Ohio and New Jersey authorities intentionally made false references to violations of New Jersey law in order to conceal the lawfulness of appellants' business operations in Ohio. Appellants asserted their emergent motion was not a motion to suppress evidence in the Ohio prosecution but instead sought to remedy the alleged fraud upon the New Jersey court.

Judge John T. Mullaney, Jr., of the New Jersey Superior Court, Law Division, denied the emergent motion on jurisdictional grounds. The judge did not decide the merits of appellants' contentions about false information in the search warrant affidavit. He concluded that the remedy appellants sought was tantamount to a motion to suppress evidence under Rule 3:5-7 of the New Jersey Court Rules, and that, in accordance with our holding in In re Mahler, 177 N.J.Super. 337 (App. Div.), certif. denied, 87 N.J. 349 (1981), such a motion must be brought in the Ohio court where the prosecution was pending. The New Jersey Court would not interfere in the criminal proceedings of another state.

The jurisdictional issue is a question of law, and therefore, our standard of review on appeal is plenary. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). We agree with Judge Mullaney that appellants are essentially seeking a suppression remedy following a search in aid of an active criminal prosecution. Their remedy, if any, must come from the Ohio court. The Superior Court of New Jersey did not have subject matter jurisdiction to invalidate the searches on the grounds asserted and to order return of the property seized.

Where another state requests assistance from New Jersey, the issuance and execution of a search warrant in New Jersey is permissible when based upon adequate probable cause. New Jersey's Rule 3:5-2 provides that "a search warrant may be issued to search for and seize any property . . . obtained in violation of the penal laws of this State or any other state."

Rule 3:5-7 establishes the procedures that a New Jersey court follows in considering a motion for exclusion of evidence in a criminal prosecution. The rule provides in pertinent part:

On notice to the prosecutor of the county in which the matter is pending or threatened, [and] to the applicant for the warrant, if the search was with a warrant . . . a person claiming to be aggrieved by an unlawful search and seizure and having reasonable grounds to believe that the evidence obtained may be used against him or her in a penal proceeding, may apply to the Superior Court only and in the county in which the matter is pending or threatened to suppress the evidence and for the return of the property seized . . . .

[R. 3:5-7(a).]

Paragraph (e) of the same rule provides:

If a motion made pursuant to this rule is granted, the property shall be delivered to the person entitled thereto, unless otherwise subject to lawful detention, and shall not be admissible in evidence in any court.

[R. 3:5-7(e).]

These procedural rules implement the Fourth Amendment exclusionary rule first established in Weeks v. United States, 232 U.S. 383, 398, 34 S.Ct. 341, 346, 58 L.Ed. 652, 658 (1914), and made applicable to the states under the Fourteenth Amendment by Mapp v. Ohio, 367 U.S. 643, 657, 81 S.Ct. 1684, 1693, 6 L.Ed.2d 1081, 1091 (1961). Relief under the New Jersey Court Rule will be denied if there is neither a pending nor threatened litigation in this State. Mahler, supra, 177 N.J.Super. at 347; cf. State v. Casale, 106 N.J.Super. 157, 159-60 (App. Div. 1969) (movant did not have standing to seek suppression of evidence seized from property that he owned since no prosecution had been brought or threatened against movant himself).

The appropriate forum to challenge an illegal search and seizure is "the forum in which the penal proceedings are pending." Mahler, supra, 177 N.J.Super. at 350-52. Because a prosecution is not pending in New Jersey, there is "no justiciable matter" before the New Jersey court. Id. at 348. So long as an aggrieved person has an appropriate forum to challenge the legality of the search warrant, there is no fundamental requirement that a warrant issued in New Jersey be subject to review in a New Jersey court. Id. at 352.

In this case, there is no pending or threatened New Jersey prosecution. Nor is there any investigation into violations of New Jersey law. The seized evidence was immediately shipped to Ohio where a criminal prosecution is taking place. Despite the New Jersey court's authority to issue the search warrants, the merits of appellants' challenge to the searches must be addressed in Ohio. In accordance with Rule 3:5-7 and the holding of Mahler, the State of Ohio is the proper forum for appellants to request suppression and return of the evidence.

Appellants accuse the New Jersey authorities of purposeful wrongdoing and assert they are not requesting suppression and return of the evidence pursuant to Rule 3:5-7 and as discussed in Mahler. They contend they are asking the New Jersey courts to invoke their "inherent powers" to remedy a fraud on the court that issued the warrants. They resort to repetitive hyperbolic accusations to support their argument that the New Jersey authorities purposefully and corruptly concealed information from the court that issued the search warrants, but at bottom, appellants essentially cling only to the inaccurate recitals in the search warrant affidavit that the laws of New Jersey were violated.

The remedy appellants seek is indistinguishable from that contemplated by Rule 3:5-7. Although appellants couch their allegations as a fraud upon the court, they allege a Fourth Amendment ground for suppression of evidence in accordance with Franks v. Delaware, 438 U.S. 154, 171-72, 98 S.Ct. 2674, 2684-85, 57 L.Ed.2d 667, 682 (1978), and State v. Sheehan, 217 N.J.Super. 20, 25-26 (App. Div. 1987), namely, that the searches were unconstitutional because they were based on deliberately or recklessly false information. The remedy they seek is return of seized property and a preclusion of its use as evidence in the Ohio court, the same remedies provided by Rule 3:5-7 and Fourth Amendment case law.

A party's characterization of the relief sought does not dictate whether a motion falls within the purview of the New Jersey exclusionary rule and our holding in Mahler. See State v. Morales, 182 N.J.Super. 502, 508 (App. Div. 1981) ("[n]or does defendant's characterization of the relief sought, " rather than its essence, affect whether a procedural rule applies or not). The nature of the allegation and the remedy sought controls the applicable law. The clear holding of Mahler requires that the New Jersey court defer to the proceedings being conducted in the Ohio court.

While we need not and do not decide in this case that a New Jersey court never has jurisdiction to consider a motion for return of property seized in aid of a foreign prosecution, the egregious circumstances alleged by appellants are not present here so that we might consider such an exception to the rule. Despite the inaccuracies in the search warrant affidavit, the application as a whole revealed to the issuing judge that the Monmouth County Prosecutor's Office was applying for a search warrant in aid of an ongoing Ohio criminal investigation. The detective's affidavit discussed in great detail the facts of the Ohio investigation and also cited the Ohio statutes that were allegedly violated. The references to violation of New Jersey laws did not obscure the fact that the search warrants were intended to assist Ohio prosecutors in their Ohio criminal investigation and prosecution.

It is no help for appellants to argue that Ohio and New Jersey prosecutors were attempting to conceal certain undisclosed Ohio governmental actions that allowed their disputed software to be used lawfully. Even if appellants are correct in arguing that the Ohio Legislature was considering a bill to impose a moratorium on prosecution of such sweepstakes operations, and even if Ohio municipal ordinances in fact permit the type of business activity in which appellants engaged, those matters are not legal issues that would be decided in the New Jersey court reviewing an application for search warrants. Especially in an ex parte proceeding for the issuance of search warrants, the New Jersey court would not engage in an examination of the nuances of Ohio law and their application to the circumstances alleged. See State v. Smith, 113 N.J.Super. 120, 137-38 (App. Div. 1971) ("The action in issuing the warrant is ex parte and merely appraises the prima facie showing of probable cause. The motion proceeding is adversarial, and the judge adjudicates all questions of law and fact posed on the challenge of the validity of the warrant."). The specific arguments appellants make are best heard by an Ohio court.

In fact, a testimonial suppression hearing was held in Cuyahoga County, Ohio, in July 2013. The Ohio court allowed appellants to make any and all arguments they deemed appropriate, including the allegations that appellants raise before us. We are informed that testimony was taken at the Ohio suppression hearing from several witnesses, including the Assistant Prosecutor and the detective of the Monmouth County Prosecutor's Office involved in obtaining the search warrants. We have not been informed of the ruling of the Ohio court.

In sum, appellants sought to suppress evidence to be used in an Ohio criminal prosecution, and the trial court in New Jersey correctly concluded that it lacked subject matter jurisdiction to decide the merits of appellants' motion.

Appellants' remedies, if any, lie within the jurisdiction of the Ohio court.[1]


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