Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 1 of 19 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI

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1 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 1 of 19 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI WESTERN DIVISION UNITED STATES OF AMERICA v. Case No.: 3:07CR192-NBB-SAA RICHARD F. SCRUGGS, DAVID ZACHARY SCRUGGS, SIDNEY A. BACKSTROM DEFENDANTS MOTION TO SUPPRESS THE FRUITS OF ILLEGAL WIRETAPS AND SEARCHES WITH COMBINED MEMORANDUM OF LAW I. INTRODUCTION Defendants Richard F. Scruggs, D. Zachary Scruggs, and Sidney A. Backstrom hereby move to suppress the fruits of illegal wiretaps and searches because the supporting affidavits contain material misrepresentations and omissions of facts critical to the determination of probable cause. Defendants bring this motion pursuant to Rule 12 of the Federal Rules of Criminal Procedure and Franks v. Delaware, 438 U.S. 154 (1978). Defendants move to suppress recordings made pursuant to wiretaps on the telephones of Timothy R. Balducci and Steven A. Patterson and the fruits thereof and to suppress the fruits of a search of the Scruggs Law Firm on November 27, Two principal defects infect each of the affidavits submitted by the government in support of their wiretap and search warrant applications. First, while the affidavits try to paint a dark picture of a conspiracy among defendants to bribe Third Circuit District Judge Henry Lackey going back to March 2007, the affidavits omit numerous specific facts known to the government which show that no such conspiracy existed and that, in fact, it was the government that created the alleged crime here. Second, the government omitted from its supporting affidavits specific evidence from audio recordings that exculpates defendants and defeats the government s conspiracy claims. 1

2 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 2 of 19 II. BACKGROUND 1 The government began its investigation in this case in April 2007 after Third Circuit District Judge Henry Lackey approached the United States Attorney s Office with allegations that attorney Timothy R. Balducci had corruptly tried to influence him. For the next five-and-ahalf months, the government monitored communications between Judge Lackey and Balducci while Judge Lackey attempted to implicate Balducci in a criminal scheme. In mid-september 2007, after Judge Lackey had not been able to turn up evidence of any criminality, the government created a criminal scheme by directing Lackey to demand $40,000 from Balducci. After three separate conversations and pressure by Judge Lackey, Balducci finally committed to pay Lackey the money he had demanded. The government then began to file a series of materially misleading affidavits in an attempt to bootstrap the criminal scheme it had forced on Balducci into a broader criminal investigation. On September 25, 2007, just a day after Balducci relented to the payment demanded by Judge Lackey, the government filed an application pursuant to 18 U.S.C. 2518, for a wiretap on Balducci s cellular phone. Ex The application states that it is based on an affidavit of FBI Special Agent William P. Delaney. Id. 4. However, the Delaney affidavit produced by the government appears to be dated September 26, Ex. 9 at 8. This Court entered the order authorizing the wiretap of Balducci s phone on September 25, Ex. 27. On October 16, 2007, the government filed an application and supporting affidavit for a wiretap on the home telephone of Steven A. Patterson, Balducci s partner. Exs. 28 & 19. The supporting affidavit, also signed by Delaney, relied in substantial part on evidence acquired from the September 25, 2007 Balducci wiretap. See Ex. 19 at This Court entered an order authorizing the Patterson wiretap on the same day. Ex The government s investigation of defendants is described in more detail in defendants Motion to Dismiss the Indictment for Outrageous Government Conduct, filed herewith. 2 All Exhibits ( Ex. ) cited herein are exhibits to the Declaration of Brook Dooley ( Dooley Decl. ) in Support of Defendant s Motion to Dismiss Indictment for Outrageous Government Conduct and Motion to Suppress the Fruits of Illegal Wiretaps and Searches ( Dooley Decl. ) filed herewith. 2

3 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 3 of 19 On October 24, 2007, the government applied for a 30-day extension of the Balducci wiretap, again relying on an affidavit from Delaney. See Exs. 30 & 31. The October 24, 2007, Delaney affidavit relied extensively on information obtained from the two prior wiretaps. See Ex. 31 at This Court entered an order authorizing the Patterson wiretap on the same day. Ex. 31. All told, since September 26, 2007, the government intercepted and recorded 12 conversations between Balducci and defendants and 4 conversations between Patterson and defendants. Dooley Decl., 10. On November 16, 2007, the government again relying on an affidavit from Agent Delaney applied for a warrant to search the offices of the Scruggs Law Firm. See Ex. 20. On the same day, this Court issued the warrant, which authorized the government to search the Scruggs Law Firm offices before November 26, Ex. 33. For reasons that are unclear, the government did not search the Scruggs Law Firm offices prior to November 26th. Instead, on that date, the government applied for a second identical search warrant for the Scruggs Law Firm using a slightly different affidavit from Agent Delaney. Ex. 25. The search warrant was granted the same day. Ex. 34. On November 27, 2007, the government executed its search of the Scruggs Law Firm. III. ARGUMENT The inclusion of deliberately false or misleading statements in an affidavit submitted to support a wiretap or search warrant application constitutes grounds for suppression of evidence seized during the wiretap or search. Franks v. Delaware, 438 U.S. 154 (1978); see also United States v. Guerra-Marez, 928 F.2d 665, 670 (5th Cir. 1991) (applying Franks standard to affidavit in support of wiretap application). Franks ensures that judges asked to make a probable cause determination are fully apprised of all pertinent information. See Franks, 438 U.S. at The Fifth Circuit has extended Franks to cover omissions and misrepresentations in the supporting affidavit. See, e.g., United States v. Tomblin, 46 F.3d 1369, 1377 (5th Cir. 1995) (citing United States v. Stanert, 762 F.2d 775, 781 (9th Cir. 1985)). 3

4 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 4 of 19 Under Franks, the court must hold an evidentiary hearing when the defendant challenges the validity of an affidavit and makes a substantial preliminary showing that (1) the allegations in the supporting affidavit were the result of deliberate falsehood or of reckless regard for the truth and (2) the remaining portion of the affidavit is not sufficient to support a finding of probable cause. Franks, 438 U.S. at 171; United States v. Dickey, 102 F.3d 157, (5th Cir. 1996). Because it will often be difficult for an accused to prove that an omission was made intentionally or with reckless disregard rather than negligently..., the Fifth Circuit has recognized that when the facts omitted from the affidavit are clearly critical to a finding of probable cause the fact of recklessness may be inferred from proof of the omission itself. United States v. Martin, 615 F.2d 318, 329 (5th Cir. 1980); see also, United States v. Cronan, 937 F.2d 163, 165 (5th Cir. 1991); Hale v. Fish, 899 F.2d 390, 400 (5th Cir. 1990) (same). A. The Court should suppress the fruits of the illegal Balducci and Patterson wiretaps. 1. The September 25, 2007 Balducci wiretap. a. Defendants have standing. Defendants have standing to challenge the legality of the September 25, 2007, application, affidavit and order authorizing the wiretap on Tim Balducci s telephone. Any aggrieved person... may move to suppress the contents of any wire... communication intercepted pursuant to Title III. 18 U.S.C. 2518(10)(a). [A]ggrieved person means a person who was a party to any intercepted wire, oral, or electronic communication or a person against whom the interception was directed. 18 U.S.C. 2510(11). A party to a conversation recorded by means of a wiretap is such an aggrieved person and thus has standing to the challenge the legality of the wiretap and the admissibility of wiretap recordings. United States v. Kelley, 140 F.3d 596, 604 n.7 (5th Cir. 1998). Sid Backstrom was a party to a conversation with Balducci on October 18, 2007, that was recorded pursuant to the September 25, 2007, wiretap authorization. Ex. 31 at 7. 3 Accordingly, Backstrom has standing 3 The Electronic Surveillance Logs produced by the government also show other conversations 4

5 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 5 of 19 to the challenge the sufficiency of the affidavit supporting the wiretap application, the legality of the order authorizing the wiretap, and the admissibility of the wiretap recordings. A party named in the order authorizing the wiretap as a party against whom the investigation was targeted is also an aggrieved person with standing to challenge the wiretap. United States v. Lavin, 604 F. Supp. 350, 356 (E.D. Pa. 1985); see also United States v. Martinez, No. 05-cr REB-07, 2006 WL , *1 (D. Colo., Dec. 22, 2006) (same). 4 Here, Dick Scruggs was identified in the September 25, 2007, order authorizing the interception of Balducci s telephone conversations. Ex. 27 at 1. Therefore, Scruggs is an aggrieved person with standing to challenge the Balducci wiretap. Moreover, in cases where the government applies for multiple wiretaps and each subsequent wiretap order issued in the long series of orders built upon previously issued orders to establish probable cause, defendants who are subsequently aggrieved may challenge the early wiretap applications. United States v. Marcello, 508 F.Supp. 586, 602 n.2 (E.D. La. 1981). In other words, where the early wiretap orders formed the linchpin upon which all later findings of probable cause and the wiretap orders were based, all defendants who were aggrieved down the line have standing to challenge the early wiretap orders. Id. Here, Dick Scruggs, Zach Scruggs, and Sid Backstrom have standing to challenge the original Balducci wiretap because it is the linchpin upon which the government s other wiretap and search warrant applications were based. Almost the only assertions regarding Patterson included in the October 16, 2007 application for a wiretap on Patterson s home telephone come from recordings made pursuant to the September 26, 2007 wiretap on Balducci s telephone. See Ex. 28. In turn, the November 26, 2007 application for a search warrant of the Scruggs Law Firm referred extensively to recordings made pursuant to the original Balducci wiretap and the between Balducci and defendants recorded pursuant to the September 25, 2007 wiretap. Dooley Decl The Fifth Circuit has so far declined to resolve whether a party named in the order authorizing the wiretap has standing to challenge the tap. See United States v. Scasino, 513 F.2d 47, (5th Cir. 1975). 5

6 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 6 of 19 Patterson tap. Ex. 25. Thus, defendants, who were undoubtedly aggrieved by the November 27, 2007 search of their law firm may challenge the legality of the September 25, 2007, linchpin order. b. The September 25, 2007 application for the Balducci wiretap appears to have been made without a sworn affidavit. The government applied for the wiretap on Balducci s phone on September 25, Ex. 26. In the government s application, Assistant United States Attorney Thomas W. Dawson states under that he examined the Affidavit of Special Agent [William P.] Delaney, that the Delaney affidavit was attached to th[e] Application, and that the Delaney affidavit was incorporated by... reference in the application. Id. at 3. However, from the copy of the Delaney affidavit in support of the first Balducci wiretap that the government produced to defendants, it appears that the affidavit is dated September 26, 2007, the day after the date of the application to which it was allegedly attached. See Ex. 9 at 8. Under the Fourth Amendment and under Title III, no wiretap may issue except on oath or affirmation. U.S. Const. amend. IV; 18 U.S.C. 2518(1). Here, it appears that the affidavit which contained the substance of the facts alleged to constitute probable cause for the wiretap was not signed under oath or affirmation until after the wiretap issued. c. The September 26, 2007 Delaney affidavit contains materially misleading statements and omits exculpatory facts that are clearly critical to the probable cause determination. In his September 26, 2007 affidavit, Delaney asserts that a wiretap on Balducci s phone is required to access the contents of the conversations between Mr. Balducci and other potential co-conspirators. Ex. 9 (12). Delaney further asserts that there is probable cause to believe that Timothy R. Balducci, Richard Dickie Scruggs, and others... are in the process of committing and will continue to commit bribery, honest services mail fraud, and money laundering. Id. (7)(a). Delaney s September 26th affidavit, however, is replete with misleading statements and omissions of facts clearly critical to the determination whether there 6

7 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 7 of 19 was probable cause to conclude that Balducci was engaged in the alleged conspiracy with Scruggs. Misleading statements regarding Judge Lackey s reaction to the March 28, 2007 meeting. Agent Delaney s affidavit mischaracterizes Judge Lackey s reaction to his March 28, 2007 meeting with Balducci. Delaney strongly suggests that Lackey contacted the United States Attorney s Office immediately after Balducci left his chambers on March 28th. After describing Judge s Lackey discussion with Balducci s on March 28th, Delaney states that [a]t the conclusion of the meeting, Judge Lackey called the U.S. Attorney s office and reported the matter to two senior AUSAs. Ex The representation that Judge Lackey called the government immediately suggests that Lackey was truly shocked and taken aback by what Balducci said and tends to imply that Balducci made an explicit offer of a quid pro quo. In fact, however, Judge Lackey did not call the government immediately. According to an interview he gave to the Wall Street Journal two days after the Indictment was filed, Judge Lackey waited days before calling the government. Ex. 8. Material omissions from summary of May 4, 2007 call. Agent Delaney states that on May 4, 2007, Balducci called Judge Lackey, and they discussed the proposed order compelling arbitration.... Ex. 2, 10. Delaney omits, however that, during the May 4th call, Balducci said that the proposed order was Just some thoughts, ideas, and suggestions I thought I d put on paper see if His Honor might be interested in. Ex. 10 at 2. The statement, omitted from Delaney s affidavit, shows that Balducci did not expect that Lackey was going to enter the order at all. Delaney also omits that there was no mention of the of counsel position at Balducci s law firm during the May 4th call. Ex. 10. Material misstatements in, and omissions from, summary of May 9, 2007 meeting. Delaney s affidavit purports to summarize a May 9, 2007 meeting requested by Lackey. However, Delaney omitted the fact that, when Balducci asked Judge Lackey whether he thought the SKG joint venture agreement required that the parties arbitrate, Judge Lackey responded, It does... It looks like that s what they agreed to. Ex. 22 at 32. The fact that Lackey was likely 7

8 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 8 of 19 to grant the motion to compel arbitration in any event completely removes any possible motive for Balducci to offer anything of value to Lackey. Delaney also omitted that Lackey told Balducci during their May 9th conversation that he wanted to make sure that Balducci got credit where credit is due for the order and told Balducci, later in the same conversation, that Balducci was going to get credit for the order. Ex. 22 at 34. This statement confirms that Judge Lackey understood that Balducci had asked him for a favor perhaps to help Balducci impress Dick Scruggs rather than that Balducci had promised him something in exchange for the order. Misleading summary of May 21, 2007 call. Delaney s affidavit states that, during a May 21, 2007 recorded conversation between Balducci and Judge Lackey, Balducci assured Judge Lackey that nobody other than Balducci and Scruggs know of the arrangement suggested by Balducci to Judge Lackey. Ex. 9 at 4. However, Delaney s affidavit fails to reveal that it was Judge Lackey who prompted Balducci to discuss Scruggs s involvement, saying I just want to hear you say it again. You and Scruggs [are the] only one[s who] know anything about this? Id. at 4. This omission thus conceals Lackey s aggressive efforts to target Balducci. Delaney s affidavit also fails to disclose that during their May 21st conversation, Balducci said a number of times that he did not want Judge Lackey to do anything improper. For example, Delaney fails to recount that Balducci told Judge Lackey, you do what you feel comfortable with and I don t mean to make you uncomfortable;... if it s not something that you feel right about, you do what your heart tells you.... I ve got complete confidence that that is completely fine.... I would never put... you nor me in that position.... I have complete confidence that it s fine. Id. at 5, 7. Delaney s affidavit also fails to disclose that Mr. Balducci said during this conversation that frankly I think we re right and I think that the law is on our side and I think probably had I never even approached you, we d a probably had the right result for us on this thing... my goal was simply to... tell you where, that I had an interest in this thing, and, if I could to help guide you to where I thought this thing... legally could come. Id. at 4, 5. Thus, Delaney omits 8

9 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 9 of 19 evidence that shows that Balducci had no motive to engage in the alleged scheme; Balducci thought Lackey was going to rule in favor of the defendants anyway. Omission of Judge Lackey s Recusal. Delaney s affidavit omits entirely the fact that, on May 21, 2007, Judge Lackey notified counsel in the Jones case that he intended to recuse himself from hearing the case. See Ex. 14. He also omits that on June 4, 2007, Judge Lackey sent counsel a second notice, announcing that he had reconsidered and would not recuse himself after all. See Ex. 15. Not only does Delaney skip Judge Lackey s recusal and un-recusal, he fails to mention that, after Lackey sent his first notice, Balducci did not contact him to urge that he reconsider. Dooley Decl. 2. Delaney also does not disclose that days after he sent the recusal letter, Judge Lackey called Balducci, but Balducci did not call him back. Judge Lackey s brief recusal and Balducci s non-response to it are clearly critical to determining whether probable cause existed to conclude that Balducci was engaged in a conspiracy to improperly influence Lackey. First, the fact that Judge Lackey, who was then a government agent involved in an ongoing investigation, voluntarily took himself out of the case suggests that Lackey did not actually think that a crime had occurred. If Judge Lackey really thought that Balducci was engaged in an improper scheme to influence him that warranted an ongoing investigation, he would not have taken himself out of position to investigate Balducci. 5 Second, Balducci s evident lack of interest in Judge Lackey s status in the Jones case strongly indicates that he was not engaged in an improper scheme to influence the Judge. Delaney s affidavit kept this critical information from the Court. Omission of Judge Lackey s aggressive pursuit of Balducci and Balducci s exculpatory statements from May 2007 to August Delaney s affidavit further fails to disclose that Judge Lackey repeatedly contacted Balducci from May until September 2007, that, during the same time period, Balducci did not initiate contact with Judge Lackey, and that, during their 5 The government has previously represented to defense counsel that it was not involved in Judge Lackey s decision to recuse himself or his decision to withdraw his recusal notice. 9

10 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 10 of 19 recorded calls and meetings, there was no discussion of any plan or scheme to influence the Judge. The affidavit does not mention at all a recorded call on May 29, 2007, during which Balducci told Judge Lackey that he only wanted Judge Lackey to do what the Judge thought the law required, saying: I damn sure didn t want to do anything to jeopardize my relationship with you I didn t want to do anything in the world ever to do that relationship any harm I want to make sure that you and I are okay and that it would break my heart if I thought I had put you in a bad position when you called the other night I could tell that you were troubled by it. That s why I told you do what your heart tells you Dooley Decl.. The affidavit also omits completely a recorded call on August 9, 2007, during which Judge Lackey re-introduced the topic of the motion to compel arbitration to Balducci and asked whether Dicky wants this thing in mediation? I mean arbitration. Ex. 11 at 15. Balducci responded, yes, if that s how you [see] it after you ve taken a look at it, if you [see] it that way, that would be terrific. Id. at 16. There is no suggestion of a bribe. Misleading summary of the September 18 and 21, 2007, conversations and omission of the September 24, 2007 conversation. Finally, the Delaney affidavit omits the context in which Balducci asked for the $40,000 payment. Left out of the affidavit is the fact that Judge Lackey pressured Balducci to agree to the payment by suggesting that he (Lackey) owed the money to people who were pressuring him for it. On September 18th, Judge Lackey told Balducci that he needed the money to help me over a little hump I ve got. Ex. 12 at 7. Then on September 21st, Judge Lackey told Balducci that his deadline for getting the money was October 1st but that, if he had half of it, I could delay my misery I think I can get them to put it off Ex. 16 at 12. Then on September 24th, to seal the deal, Judge Lackey called Balducci and asking him, Can I commit to my folks that are pressurin me, something by the weekend? Ex. 17 at 4. These statements, and Balducci s responses, are evidence that Balducci did not understand that the payment Judge Lackey requested was directly connected to the order in the Jones case. 10

11 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 11 of The October 16, 2007 Patterson wiretap a. Defendants have standing. Defendants have standing to the challenge the legality of the Patterson wiretap and the admissibility of the wiretap recordings because they were parties to telephone conversations recorded by means of the wiretap. Kelley, 140 F.3d at 604 n.7. Dick Scruggs was recorded talking to Patterson on October 18, 2007, and then again on November 1, Dooley Decl. 10. Scruggs also has standing because he is named in the order authorizing the wiretap as a party against whom the investigation was targeted. Lavin, 604 F. Supp. at 356; see also Martinez, 2006 WL at *1. Indeed the October 16, 2007, order authorizing the Patterson wiretap specifically labels Scruggs as a target subject[]. Ex. 29 at 1. b. The October 16, 2007 Delaney affidavit omits facts that are critical to the probable cause determination. On October 16, 2007, the government filed an application for a wiretap on the telephone of Steven A. Patterson. In his accompanying affidavit, Agent Delaney swears to probable cause that Balducci, Patterson, Scruggs, and Presley L. ( P.L. ) Blake were engaged in ongoing bribery, wire fraud and money laundering. Delaney s affidavit specifically asserts that communications obtained pursuant to the prior wiretap on Balducci s telephone demonstrate the knowing participation by Patterson and P.L. Delaney s affidavit, however, omits critical facts that directly contradict his assertions. Omission of key statement from summary of conversation between Balducci and Patterson on the morning of September 27, Delaney blatantly omits a statement that directly shows that Blake had no knowledge that Balducci had agreed to Judge Lackey s request for $40,000. Delaney describes a conversation at 8:51 a.m. on September 27, 2007, between Balducci and Patterson in which Patterson tells Balducci that he (Patterson) had talked to Blake, that he had told Blake that he had a problem that was going to solve, and that Blake had told him to go ahead and solve it. Ex. 19. According to Delaney s affidavit, Patterson then told Balducci 11

12 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 12 of 19 that he s already talked to P.L. and that he ( P.L. ) knows the amount. Id. What Patterson actually said during this conversation was: I ve already done that. P.L. doesn t know what it s about or anything. He does know the amount. Ex 35 at 3. Delaney blatantly fails to include in his affidavit the fact that Blake did not know what the $40,000 was for. Omission of key exculpatory statements from summary of September 27, 2007, meeting between Balducci and Judge Lackey. Delaney similarly omits statements made by Balducci during his September 27, 2007, meeting with Judge Lackey that gut the government s theory that Scruggs was a knowing member of the alleged conspiracy. Delaney s affidavit contains a short description of the September 27th meeting between Balducci and Lackey. See Ex Delaney, however, completely fails even to mention the following exchange between Balducci and Judge Lackey, which utterly defeats Delaney s sworn statement that Dick Scruggs was a member of the alleged conspiracy. Balducci: Lackey: Balducci: Lackey: Balducci: Lackey: Balducci: Lackey: Balducci: Lackey: Balducci: Lackey: I want you know, though, this is just between me and you Ok. Ok? This is just between me and you. Alright. There ain t another soul in the world that knows about this, ok? And this is, this is, this is taken care of Yeah. ok? You don t, now I would think Mr. SCRUGGS would have to know something Well, here about it. here s how it works, just so you ll have some, some comfort, some understandin of how it works. Um, they ll come a time where I ll sit him down in private and I ll tell him that I solved a problem for him. Alright 12

13 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 13 of 19 Ex. 18 at 10 (emphasis added). Delaney s affidavit also fails to mention that Lackey tried again later in the same conversation to implicate Scruggs in the payment arrangement he had instigated with Balducci Lackey: Balducci: Lackey: Balducci: Lackey: Balducci: When you tell Mr. Scruggs or Dickie or whatever I ought to call him You tell him that this is a first time venture for me He is not even involved at that level judge Oh alright Frankly I mean he doesn t even like I said, the way this will work is I ll just go to him at some point in time and say that I cured a problem that you had and you need to recognize the problem that I have cured you ve had that s how it works. Alright He is not involved in a direct manner doesn t want to be, doesn t need to be Id. at 22, 23. Finally, Delaney fails to mention that, at the conclusion of their September 27, 2007 meeting, Balducci tells Lackey you take comfort that this is between me and you. This doesn t go any further than this right here. Id. at 24, 25. Omission of key exculpatory statement from summary of October 10, 2007, call from Balducci to Judge Lackey. Delaney s affidavit purports to summarize a call made by Balducci to Judge Lackey on October 10, See Ex According to Delaney s affidavit, Balducci placed a call to Lackey and asks when could he pick up the sweet potatoes (order). Judge Lackey indicated probably by the end of the week. Id. That is the sum total of Delaney s summary in his affidavit. Omitted from this summary is that fact that, not only is there no discussion of the payment to Judge Lackey during this call, but, in fact, at the end of the call after they discussed the order, Balducci tells Lackey that he needs to see him about finishing up on that other deal. Ex 36 at 4. This reference to the payment as an other deal is strong evidence that Balducci did not understand Lackey s request for the payment to be connected to the order. 13

14 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 14 of 19 This is a third fact that strikes at the heart of the government s theory of the case that Delaney entirely left out of his October 16, 2007 affidavit. 3. The October 24, 2007 Balducci wiretap extension a. Defendants have standing Defendants have standing to challenge the affidavit in support of the October 24, 2007 application for an extension of the Balducci wiretap. As discussed above, a party to a recorded conversation has standing to challenge the legality of the wiretap. Kelley, 140 F.3d at 604 n.7. Backstrom was a party to a telephone conversation on October 31, 2007, recorded pursuant to the October 24, 2007, wiretap extension application and affidavit. Ex. 37. Defendants also have standing because the government recorded a call from Balducci to the Scruggs Law Firm offices pursuant to the October 24, 2007 wiretap extension. [O]wners of the premises where an illegal wiretap occurs have standing to challenge the interception, even if the owners did not participate in the intercepted conversations. United States v. Gonzalez, Inc., 412 F.3d 1102, 1116 (9th Cir. 2005); see also United States v. Houltin, 525 F.2d 943, 946 (5th Cir. 1976), vacated in part on other grounds sub nom, Croucher v. United States, 429 U.S. 1034, (1977). In Houltin, the Fifth Circuit held the defendant had standing to challenge a recoding of a call involving a third party because one of the participants in the call was speaking from the defendant s home. Houltin, 525 F.2d at 946. Here, the government recorded Balducci calling the Scruggs Law Firm on October 31, Ex. 37. Dick Scruggs, Zach Scruggs, and Sid Backstrom as the principal owners of the Scruggs Law Firm thus have standing to challenge the validity and admissibility of that recording. b. The October 24, 2007 Delaney affidavit repeats the misstatements and omissions contained in the earlier affidavits. In the October 24, 2007 affidavit, Delaney swore that Balducci, Scruggs, Backstrom and others were in the process of committing bribery, wire fraud, and money laundering, and that they would continue to do so. Ex. 31. Delaney also represented that the conspiracy was expanding and that the wiretap extension was necessary to capture the content of Balducci s 14

15 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 15 of 19 communications with co-conspirators. Delaney also swore that direct communication between Balducci and Scruggs was more likely because Patterson was planning to be out of the country for 3-4 weeks starting at the end of October. Delaney, however, repeated in his October 24th affidavit the same falsehoods and omissions contained in his September 26th and October 16th affidavits. In particular, he continued to omit any reference to Balducci s statements on September 27, 2007 that Scruggs was not involved in the payment arrangement that Lackey had imposed on Balducci. 4. The Court should hold a Franks hearing as to the wiretap applications. As demonstrated above, the facts omitted from the [Delaney] affidavit are clearly critical to a finding of probable cause such that the Delaney s recklessness may be inferred from proof of the omission itself. Martin, 615 F.2d at 329. In each affidavit, the stated rationale for the wiretap was the existence of other conspirators about whom the government needed to gather evidence. For example, in his September 26, 2007 affidavit in support of the first Balducci wiretap, Delaney stated that it is the content of the conversations between Mr. Balducci and other potential co-conspirators that is needed.... Ex. 9 (12). Yet in each of his affidavits, Agent Delaney omitted specific evidence known to him through wire tap recordings that disproved the existence of any real conspiracy. For example, as discussed above, the September 26, 2007, Delaney affidavit omits most of the history of the Judge Lackey-Balducci relationship, described above, which showed that Balducci had ever intended to enter a criminal scheme to influence Judge Lackey. Furthermore, in the absence of any evidence of a real conspiracy, the remaining portions of the Delaney affidavits do not suffice to support a finding of probable cause, particular when viewed with the material omissions added back in. Accordingly, defendants respectfully request an evidentiary hearing at which to further prove the false and misleading nature of the government s affidavits in support of the Balducci and Patterson wiretap applications. 15

16 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 16 of 19 B. The Court should suppress the fruits of the illegal search of the Scruggs Law Firm. On November 26, 2007, the government applied for a search warrant to search the offices of the Scruggs Law Firm. Ex. 25. The application was filed with an affidavit of Agent Delaney, in which Delaney stated that Balducci, Patterson, and defendants Dick Scruggs, Zach Scruggs, and Sid Backstrom were conspiring to commit bribery and wire fraud. Id. at 2. The November 26, 2007, Delaney affidavit, the content of which was copied almost completely from his previous affidavits, contains numerous misleading statements and omissions of material, exculpatory facts. 6 The November 26, 2007, Delaney affidavit repeats many of the misstatements and omissions in his earlier affidavits. As in his September 26, 2007 affidavit, Delaney omits any mention of the facts from May-September 2007, described above, that showed there was no preexisting criminal scheme on Balducci s part but rather that Judge Lackey, as an agent of the government, created the supposed conspiracy. Like his October 16, 2007 affidavit, the November 26th Delaney affidavit mention the meeting on September 27, 2007 between Judge Lackey and Balducci, but it excludes any mention of the fact Balducci said three times that Dick Scruggs had nothing to with the alleged bribery scheme. See Ex. 18. The affidavit also omits from its discussion of the October 10, 2007 call between Judge Lackey and Balducci any mention of the fact that Balducci, after discussing the Jones case, referred to the balance of the $40,000 payment as the the other deal. Ex. 36. The November 26, 2007 Delaney affidavit is also misleading with respect to Delaney s account of two September 27, 2007, calls between Balducci and Patterson. In his earlier, October 16, 2007 affidavit, Delaney asserted the existence of a conspiracy involving P.L. Blake. See Ex. 19 7(a). In that affidavit, Delaney provided an account of a call between Balducci and 6 As noted above, the government applied for, and was granted, an identical search warrant for the Scruggs Law Firm on November 16, Ex. 34. The November 16th application was also based on an affidavit of Agent Delaney. Ex. 20. The two Delaney affidavits in support of the Scruggs Law Firm search are nearly identical but contain some distinct differences. Compare Ex. 20 at 5 ( The order was signed but had not been entered. ), with Ex. 25 at 5 ( The order was not signed or entered. ). The government has not explained the two applications and affidavits. 16

17 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 17 of 19 Patterson recorded at 8:51 a.m. on September 27th, during which Patterson suggested to Balducci that Blake knew that Patterson had solved a problem for 40 and during which Balducci said that he was going to tell Dick Scruggs that Blake would be contacting him. Ex. 35 at 5. Omitted from the October 16th affidavit, however, is the fact that Patterson told Balducci that Blake did not know what the 40 was for. Id. at 3. Delaney s November 26,2007 affidavit does not identify Blake as a target or as member of the alleged conspiracy. Ex. 25. Unlike in his earlier affidavit, Delaney omits from his description of the September 26, 2007, call all references to Blake. Id. IV. CONCLUSION For the foregoing reasons, defendants Richard F. Scruggs, David Zachary Scruggs, and Sidney A. Backstrom respectfully request that the Court suppress the wiretap recordings of Balducci and Patterson as well as the fruits of the November 26, 2007 search of the Scruggs Law Firm. Defendants respectfully request oral argument on this motion. Dated: February 11, 2008 By: /s/ John W. Keker John W. Keker (Pro Hac Vice) Jan Nielsen Little (Pro Hac Vice) Brook Dooley (Pro Hac Vice) Travis LeBlanc (Pro Hac Vice) Warren A. Braunig (Pro Hac Vice) KEKER & VAN NEST, LLP 710 Sansome Street San Francisco, California Telephone: (415) Facsimile: (415) Co-Counsel for Defendant Richard F. Scruggs 17

18 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 18 of 19 Dated: February 11, 2008 By: /s/ Frank W. Trapp Frank W. Trapp, MSB #8261 PHELPS DUNBAR P.O. Box Jackson, Mississippi Telephone: (601) Co-Counsel for Defendant Sidney A. Backstrom Dated: February 11, 2008 By: /s/ J. Rhea Tannehill, Jr. J. Rhea Tannehill, Jr., MSB #10449 TANNEHILL & CARMEAN, PLLC 829 North Lamar Boulevard, Suite 1 Oxford, Mississippi Telephone: (662) Facsimile: (662) Co-Counsel for Defendant Sidney A. Backstrom Dated: February 11, 2008 By: /s/ Todd P. Graves Nathan F. Garrett (Pro Hac Vice) Todd P. Graves (Pro Hac Vice) GRAVES BARTLE & MARCUS, LLC 100 Main Street, Suite 2600 Kansas City, Missouri Telephone: (816) Facsimile: (816) For Defendant David Zachary Scruggs 18

19 Case 3:07-cr NBB-SAA Document 91 Filed 02/11/2008 Page 19 of 19 CERTIFICATE OF SERVICE I, Brook Dooley, do hereby certify that I have electronically filed the foregoing Defendants Motion to Suppress the Fruits of Illegal Wiretaps and Searches With Combined Memorandum of Law with the Clerk of the Court using the ECF system, which sent notification for such filing to Thomas W. Dawson, Assistant United States Attorney, Robert H. Norman, Assistant United States Attorney, David Anthony Sanders, Assistant United States Attorney, Frank W. Trapp, J. Rhea Tannehill, Jr., Nathan F. Garrett, and Todd P. Graves. This, the 11th day of February, /s/ Brook Dooley Brook Dooley 19