The Feinstein Case |
IN THE
SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY
OF LOS ANGELES THE PEOPLE OF
THE STATE OF
) Case No. BA242822 CALIFORNIA,
)
Plaintiff, )
MEMORANDUM vs.
)
OPINION AND ORDER ON
)
DEFENDANTS’ MOTION TO ROUHEL
RAYMOND
FEINSTEIN and
)
TRAVERSE AND QUASH MARILYN SLOME
FEINSTEIN,
) SEARCH WARRANTS
)
Defendants.
) Defendants
Rouhel Raymond Feinstein and Marilyn Slome Feinstein move, under
California Penal Code section 1538.5 and Franks v. Delaware
(1978) 438 U.S. 154, to traverse and quash three search warrants
executed on the Feinsteins’ residence and on two of Rouhel Feinstein’s
places of business. The law and the record require that the motion be
granted. Procedural
and Factual Setting
On February 5, 2003, the People filed a Felony Complaint for Arrest
Warrant against Rouhel Raymond Feinstein and Marilyn Slome Feinstein. The
complaint alleged that the Feinsteins failed to file state tax returns for
the years 1997 through 2001. The complaint further alleged that Rouhel
Feinstein had operated a chop shop, received stolen property, and
committed insurance fraud. On June 30, 2003, the People filed an Amended
Felony Complaint adding two counts against both defendants for possession
of assault weapons.
The preliminary hearing began on May 18, 2004. The People called
Sergeant Susan Hayn of the Glendale Police Department as their first
witness. At the conclusion of the first day of Sergeant Hayn’s testimony,
the defense announced its intention to file a motion to traverse and quash
the search warrants executed on the Feinsteins’ home and on Rouhel
Feinstein’s businesses. The defendants filed their motion, together with a
brief and exhibits, on June 11, 2004.
The People conceded that Sergeant Hayn’s testimony on the first day
of the preliminary hearing satisfied the requirement under Franks that the
defense make a substantial preliminary showing that the affidavit
supporting the warrant contained deliberate falsehoods or statements made
in reckless disregard of the truth. The People also conceded that if the
allegedly false material were set to one side, the remaining content in
the affidavit would be insufficient to establish probable cause.
Accordingly, the court suspended the preliminary hearing and proceeded
with the evidentiary hearing under Franks. The defense called eight
witnesses: Sergeant Hayn, Scott Shaw, Amanda Lovejoy, Alvin Dick,
Detective Timothy Williams of the Los Angeles Sheriff’s Department,
Special Agent Wesley Schwark of the United States Secret Service, Sandy
Ricard, and Rouhel Feinstein (on the issue of standing only). The
testimony of the witnesses, together with the exhibits admitted into
evidence and matters of which the court may take judicial notice,
establish the following facts: The
Affidavit Submitted in Support of the Search
Warrant
On
February 21, 2001, then-Detective (now Sergeant) Susan Hayn of the
Glendale Police Department and Mr. Scott Shaw, an employee of the National
Insurance Crime Bureau, presented to a magistrate an affidavit in support
of search and arrest warrants. (Ex. A.) (NICB is a private organization
that investigates suspected insurance fraud. Shaw is not a law enforcement
officer.) The affidavit, signed on February 20, listed Hayn as the affiant
and Shaw as the co-affiant. Hayn requested warrants for the arrests of
Rouhel Raymond Feinstein and Niloofar Nicole Javaherian. Hayn also
requested warrants to search six locations, including the residence of
Rouhel Feinstein and his wife; Silver Arrow Auto Body, a body shop
operated by Feinstein; and Van Nuys Motors, a garage operated by
Feinstein. Shaw
wrote the affidavit for Hayn’s signature as well as his own. Shaw
testified that Hayn read the affidavit before she and Shaw submitted it to
the magistrate. The affidavit’s “Statement of Probable Cause” first
recited Hayn’s and Shaw’s background and experience in investigating
insurance fraud. At the time, Hayn had been a police officer for 15
V2 years. Shaw stated that he had been an insurance
investigator in the State of California for more than 14 years. In their
affidavit, Hayn and Shaw described the methods people commonly use to
commit insurance fraud, including fabricating traffic collisions that
never happened and staging collisions using both co-conspirators and
innocent victims. In
the section of the affidavit entitled “Current Investigation,” Shaw stated
that he had received a telephone call on January 29, 2001, from Special
Agent Wesley Schwark of the United States Secret Service. Schwark told
Shaw that he had a confidential, reliable informant “who [had been]
involved in a staged traffic accident” and who was willing to meet and
discuss his “knowledge and participation” in the resulting “fraudulent
insurance claim.” Hayn and Shaw met Schwark at a McDonald’s; Schwark
introduced them to the informant, a man named Jacob
Stephanian.
The Hayn/Shaw affidavit described their interview of Stephanian as
follows: Stephanian
said he had a friend named “Ray Steinberg” who owned a body shop, “Silver
Arrow Collision Center.” Stephanian showed Hayn and Shaw a business card
for Silver Arrow; Hayn and Shaw returned the card to Stephanian without
making a copy of it. Stephanian told Hayn and Shaw that he owed someone a
lot of money; Steinberg had suggested to Stephanian that he participate in
a “paper-staged” (i.e., fictionalized) accident ‘and use the money he
would make to pay his debt. Stephanian said that Steinberg took his 1995
red Mercedes to Silver Arrow, where it was stripped. The other party to
the October 2000 staged accident was supposed to have been an Amanda
Lovejoy, driver of an Acura. Stephanian was supposed to have had a
passenger in his car: his girlfriend Eva Ulicna. Stephanian told Hayn and
Shaw that Steinberg reported the fraudulent claim “to the insurance
company.” (It is unclear whether Hayn and Shaw meant Stephanian’s
insurance company or Lovejoy’s.) Stephanian displayed to Hayn and Shaw a
document showing that he and/or the red Mercedes were insured by GEICO.
(Again, Hayn and Shaw did not make a copy.) Stephanian said Steinberg told
him that an unnamed GEICO adjuster “had worked with him on previous
fraudulent claims and the car would not be inspected.” (Stephanian
apparently did not explain why the car was stripped if it was not going to
be inspected.)
Stephanian told Hayn and Shaw that Steinberg “and his body shop
were involved in all aspects of insurance fraud.” Stephanian said he and
Steinberg “discussed the body shop’s involvement in damaging vehicles for
staged accidents; the referral of personal injury cases to attorneys and
medical clinics; the payment to tow truck drivers for the referral of
personal injury cases; and false and fraudulent auto theft claims.” The
affidavit provided no details of any of these alleged incidents or
transactions.
Stephanian told Hayn and Shaw that he “was referred” to the Encino
Health Center where he and Ulicna were x-rayed but received no therapy.
Stephanian said that Center doctor Nicole Javaherian had them sign
treatment logs with various pens to create fraudulent records of treatment
never received. Stephanian said that “the insurance company” paid him and
Ulicna for this fraudulent claim. - (Again, it is unclear to which
“insurance company” Hayn and Shaw were referring.)
On February 1, 2001, Hayn and Shaw went to see Amanda Lovejoy at
her home in Santa Monica. According to the affidavit, Lovejoy told them
that she drove an Acura and was insured by 20th Century.
Lovejoy said that neither she nor her car had been involved in a collision
with Jacob Stephanian. The affidavit adds that Lovejoy said her father
“was insured with CNA Insurance at the address that appears in the claim
file.” (Hayn and Shaw do not say to what “claim file” they were
referring.)
That same day, Hayn and Shaw met with Mr. Sandy Ricard, a GEICO
fraud investigator.
According to the affidavit, Ricard “researched a claim dated October 27,
2000” for a red Mercedes driven by Stephanian. Ricard told Hayn and Shaw
that a “Ray Feinstein” had made the claim as lien-holder on the red
Mercedes. Ricard also said that GEICO had paid Silver Arrow for the
property damage portion of the claim, that “CNA Insurance paid the bodily
injury portion of the claim,” and that CNA’s insured was Amanda
Lovejoy.
According to the affidavit, Ricard told Hayn and Shaw that “he was
involved in the investigation of other suspected fraudulent claims”
involving Silver Arrow and Javaherian. Ricard referred specifically to two
claims relating to reported collisions in February 2000 and April 2000.
GEICO’s insured on those claims was a Francis Raftari. An attorney named
Adamsky had submitted the claims to GEICO. Javaherian had been the
treating provider. Silver Arrow “inspected” the damage to Raftari’ s
vehicle after the February 2000 accident. Ricard believed that the damage
to the vehicle reported after the April accident was the same damage
previously reported for the February accident. The affidavit contained no
allegation that Silver Arrow was involved in any way in the claim for the
April 2000 incident.
Hayn and Shaw stated in the affidavit that Rouhel Feinstein had
“numerous arrests and convictions for theft and related charges,” that he
had been “arrested for burglary, theft and forged/altered vehicle
registration violations,” and that he had “prior convictions for theft and
trespassing with injury to property.” Hayn and Shaw added that Feinstein
had more than eight firearms “registered to him at various
locations.”
The affidavit stated that Shaw had “researched [NICB’s] All Claims
Database” on February 8, 2001, and located a record of a fraudulent claim
made October 14, 2000 by a John Roper. “The body shop listed in the claim
was . . . Silver Arrow.” (Ex. A, “Current Investigation” at 14.) Hayn and
Shaw added that authorities had investigated Roper for insurance fraud in
the past and that he had “alleged ties to the Gambino Crime Family.”
(Id.) The affidavit also stated that a Garo Momdjian had previously
been arrested for insurance fraud, and that at some unspecified time in
the past Momdjian had filed a fictitious business name statement “at
Silver Arrow Collision Center.” (It is unclear whether Hayn and Shaw meant
that Momdjian had filed a statement using that name or only a statement
for a business located at the same address.)
Hayn and Shaw concluded their affidavit with their stated “belie[f]
[that] the claims submitted for the alleged October 27,2000 accident
between [Stephanian] and Amanda S. Lovejoy are both false and fraudulent
as no accident ever took place.” (Id. At
15.) Stephanian
‘s Recommendation to Hayn and Shaw by Schwark and
Williams
Timothy Williams, a detective with the Los Angeles County Sheriff’s
Department, testified at the Franks hearing that he met Jacob
Stephanian in about September 2000. Stephanian’s lawyer in a federal
criminal case (described below), Richard Debro, brought Stephanian to
Williams’ office. Debro told Williams that Stephanian wanted a letter of
consideration to assist him in obtaining a reduced sentence on his federal
conviction. Stephanian had been a suspect in a case Williams had handled
earlier that year involving a “merchandise bust-out” fraud. In the fall of
2000, Stephanian gave Williams information that helped lead to the arrest
of suspects in a “credit card bust-out” in the West San Fernando Valley.
(As yet, there are no convictions in that case.) Stephanian never gave
Williams any information concerning any insurance
fraud.
Williams “passed [Stephanian] off” to agents of the United States
Secret Service. Secret Service Special Agent Wesley Schwark testified that
he met Stephanian in December 2000. Another Secret Service agent,
Christine Ferrario, had used Stephanian as an informant on a case. Schwark
knew that Stephanian was a defendant in a pending federal cocaine
trafficking case. Stephanian gave Schwark a credit card “skimmer” related
to a credit card fraud operation. Stephanian
told Schwark that he “knew some people who had been involved with staged
collisions.” Schwark referred Stephanian to the Glendale Police Department
Task Force on which Hayn and Shaw were working. Schwark testified that he
told Hayn and Shaw, “We just met this guy not too long ago.” Schwark said
that Stephanian had brought him a credit card skimmer. (Hayn testified
that Schwark told her Stephanian had provided information but he did not
give any specifics and she did not ask.) Schwark described Stephanian to
Hayn and Shaw as “confidential and reliable,” adding “so far, so good.” At
that point, Schwark had worked with Stephanian for about a month and a
half.
Detective Williams testified that he spoke with a female Glendale
police officer — Hayn, presumably -- on the telephone about Stephanian.
(Hayn testified that she obtained Williams’ telephone number and called
him; he was “a stranger” to her.) Williams told the female officer that
everything Stephanian had done for him in the past was “exactly 100%
accurate.” Williams also said, however, that he “always went out and
corroborated” what Stephanian told him. Williams testified that he “would
never do anything [based on information Stephanian provided] without some
type of corroboration.” Williams stated that he did not trust Stephanian
because he was “a criminal informant.” Williams told Hayn that Stephanian
had to be “controlled” and that, if she used him in any way, she “need[ed]
to monitor [him] closely.” Hayn knew that Stephanian’s work for Williams
had nothing to do with insurance fraud. Hayn and Shaw did not include any
information about Williams in the affidavit. The
Secret Service later paid Stephanian for his information. Schwark
estimated that the government paid Stephanian “a couple thousand dollars”
in March or April of 2001. False
Statements, Serious Inaccuracies, and Material Omissions in Hayn ‘s and
Shaw‘s Search Warrant Affidavit
During
nearly six days of testimony, the defense demonstrated many false
statements, inaccuracies, and omissions in the affidavit that Hayn and
Shaw presented to the magistrate in support of the search warrant
applications for Feinstein’s home and businesses: 1.
Stephanian’s story was that he had not been in an accident and that the
reported accident had been fabricated. That is untrue. There was a
real accident on July 16, 2000, at Camden Drive and Santa Monica Boulevard
in Beverly Hills. (See generally Ex. 3 {CNA claim file].) Stephanian,
driving a 1997 silver Mercedes Benz, was rear-ended by Alvin Dick, who was
driving a Lexus. Stephanian’s girlfriend Eva Ulicna was in his car at the
time. Alvin Dick is the father of Amanda Lovejoy. Dick was insured by CNA.
CNA found Dick to be at fault in the accident; accordingly, it paid both
the property damage to Stephanian’s car and the bodily injury claims of
Stephanian and Ulicna. Attorney Richard Debro represented Stephanian and
Ulicna in their claim against Dick and CNA. (Exs. 3, H [CNA photos of
Dick’s car], & J [July 17, 2000 letter from CNA to Lovejoy at Dick’s
address re July 16 collision].) 2. Again,
Stephanian’s story was that he was involved in a paper-staged accident in
October 2000. That is untrue. Stephanian was involved in a second real
accident on October 27, 2000, in Tarzana. He was driving a red 1995
Mercedes Benz. The other driver was a person named Lopez. (Ex. U.)
Feinstein, the lien-holder on the Mercedes, reported the accident to GEICO
on January 16, 2001, after he repossessed the car from Stephanian. (Ex. Q,
GEICO Claim Activity Log.) Feinstein reported that Stephanian, in turning
left, had failed to yield the right of way to an oncoming car. (Id.)
On March 2, 2001, Feinstein called GEICO and said that “the insured”
had “[taken] care of [the] damages himself and that [GEICO] [could] close
[its] claim file.” (Id.) GEICO never paid out any money on the
claim. 3. Hayn and
Shaw represented to the magistrate that Stephanian was a reliable and
credible informant. That is untrue. A federal grand jury had indicted
Stephanian in September 1999 for conspiracy to possess cocaine with the
intent to distribute. United States v. Jacob Stephanian et al.,
Case No. 99-CR-915-LGB. (Ex. B.) Stephanian pleaded guilty to the
charge on December 21, 1999. (Id. at 20.) Stephanian was facing a
possible fourteen-year term in federal prison. After a detention hearing
pending sentencing in March 2000, the Honorable Lourdes G. Baird released
Stephanian on $75,000 bond,
ordering him to surrender his passport and not to leave the state without
the court’s permission. (Id. at 22-23.) Judge Baird ordered
Stephanian to remain under the “intensive supervision” of pretrial
services and not to enter the premises of any airport, train or bus
station, or seaport. (Id) While out of custody awaiting sentencing,
Stephanian was arrested twice for felony grand theft. (Exs. F, G [October
13, 2000 arrest for violation of Penal Code section 487(a)].) On August
18, 2003, Stephanian failed to appear in federal court for sentencing.
(Ex. B at 28-29.) Judge Baird issued a bench warrant for his arrest.
(Id.) The warrant apparently remains
outstanding. 4. Hayn and
Shaw stated that Feinstein had been arrested for burglary. That is untrue.
Feinstein was arrested for misdemeanor petty theft in May 1986. He was
arrested again for the same offense in November 1999. Feinstein was
convicted in the 1986 case and placed on summary probation. In the 1999
case, Feinstein pleaded to a reduced charge of trespass. In March 1989,
Feinstein was arrested for a violation of Vehicle Code section 4463(a)
(forge or alter vehicle registration). The case was
dismissed. Findings
Regarding
Credibility and Bias of Sergeant
Hayn and Mr. Shaw
The
court closely observed Sergeant Hayn and Mr. Shaw during several days of
testimony. Unfortunately, neither was credible. The facts known to Hayn
and Shaw as of February 21, 2001, presented many very large red flags that
any reasonable officer or investigator would have pursued. Hayn’s and
Shaw’s conduct was not objectively reasonable, and they either knew their
statements were false or acted in reckless disregard of their statements’
falsity. The following fifteen facts permit no other
conclusion:
1. Hayn told Deputy District Attorney Eric Lavine that she had
spoken with Ulicna by telephone in Canada and that she considered Ulicna
“worthless as a witness.” Consistent with the People’s obligation under
Brady v. Maryland (1963) 373 U.S. 83, DDA Lavine disclosed that
fact to defense counsel. Hayn then denied on the stand, under oath, having
made such a statement to DDA Lavine. The People stipulated that, had DDA
Lavine been called as a witness, he would have testified that Hayn in fact
had made the statement. The court commends DDA Lavine for the integrity he
demonstrated throughout this proceeding.
2. Deputy District Attorney Anthony Colonnino asked at least twice
if he could read the affidavit before Hayn and Shaw submitted it to the
magistrate. Hayn and Shaw refused to show the affidavit to Colonnino or to
any other prosecutor. At the hearing, each testified that it was the
policy of the Glendale Police Department not to show search warrant
affidavits to prosecutors before they were submitted. A police department
policy against cooperating with prosecutors in this way is surprising and
puzzling. Neither Hayn nor Shaw documented this claimed policy. Neither
Hayn nor Shaw offered any reason such a policy would
exist.
3. Hayn stated that Deputy District Attorney Colonnino was
“unavailable” on February 20 and 21, 2001, to read the affidavit in any
event. When asked why the request for the search warrants was urgent, Hayn
answered that she was concerned Stephanian would leave for Canada. As an experienced police officer
with more than fifteen years in law enforcement, Hayn must have known that
a convicted drug trafficker awaiting sentencing would not be permitted by
the court to leave the jurisdiction. Her fear of Stephanian’s imminent
flight logically and reasonably should have given rise to grave concerns
regarding Stephanian’s reliability as an informant. Moreover, Stephanian’
s expected or feared departure from the jurisdiction impeached the basis
for Hayn’s relationship with him: that Stephanian would provide useful
information to Hayn and she would write to Judge Baird to request leniency
in his sentencing. A reliable convicted felon awaiting sentencing and
seeking consideration stays and cooperates. Reliable informants do not run
away. (Stephanian in fact fulfilled Hayn’s fear. Sometime between February
2001 and August 2003, Stephanian did run to Canada. Stephanian thereby
proved that Hayn was right to worry that Stephanian was an unreliable
character.)
4. Hayn admitted that she was aware of Stephanian’s arrests in 2000
while awaiting sentencing. Hayn testified that she did not know the
arrests were for grand theft, but admitted on cross-examination that she
ran a rap sheet for Stephanian on January 31, 2001. Hayn did not ask
Stephanian any questions about either of these arrests. Stephanian’s
arrests for crimes involving dishonesty should have alarmed Hayn. They
called his credibility and veracity into question. They also undercut his
story that he was behaving and cooperating in order to receive
consideration on his federal sentence.
5. Hayn testified that she has talked on the telephone with
Stephanian since he fled to Canada. Hayn stated that she has a cellular
telephone number for Stephanian; she has “always [been] able to get
through to him at that number.” Hayn testified that she did not learn
until May 2004 that there is a federal bench warrant out for Stephanian’s
arrest. Hayn testified that, since learning of the warrant, she has not
contacted the United States Attorney’s Office or other federal authorities
to give them the cell number or other information regarding Stephanian’ s
whereabouts.
6. Hayn wrote a letter dated May 8, 2001, to Judge Baird, asking
for consideration in Stephanian’s sentencing on the federal cocaine
conspiracy conviction. (Ex. M.) Hayn wrote that Stephanian’s information
had “led to the arrest of seven people involved in complex conspiracies to
commit insurance fraud and grand theft auto,” and that authorities had
“seized” and “impounded” “approximately 21 vehicles” that were “suspected
or identified as stolen vehicles.” (Id) However, at the time Hayn
wrote her letter, Feinstein’s vehicles — as well as his laptop, Palm
Pilot, cellular telephones, safe deposit box keys, and cash -- had been
returned to him under a series of stipulations between his counsel and the
District Attorney. (Exs. N, 0, P.) Hayn’s letter suggested that
authorities had retained the vehicles as fruits of a crime, when in fact
they had been returned to the suspect.
7. As a witness, Shaw did not inspire confidence. His conduct and
demeanor were argumentative, hostile, and unprofessional. Before the
court, while on the stand, Shaw addressed defendant Rouhel Feinstein
directly, using his first name, in a challenging and confrontational
manner. Feinstein apparently had directed various insulting words and
gestures at Shaw in the hallway outside the courtroom. Such behavior by a
criminal defendant, while unfortunate, is not particularly surprising. But
such behavior by a witness who allies himself closely with law enforcement
gives rise to serious questions of bias, interest, and
motive.
8. Witness Amanda Lovejoy credibly contradicted statements that
Hayn and Shaw claimed Lovejoy had made to them. Hayn and Shaw testified
that Lovejoy told them on February 1, 2001, that her father Al Dick was
senile and had not driven in many years. Shaw testified that Lovejoy said
that neither she nor Dick had been involved in any accident. Hayn first
testified that Lovejoy told them that Dick had never been involved in an
accident. Later in the hearing Hayn changed her story, testifying that
Lovejoy said Dick had been involved in an accident “with some females.”
Hayn and Shaw did not include any of these facts in their affidavit, even
though (if true) they would have bolstered any attempted showing of
probable cause. Contrary to Hayn’s and Shaw’s statements, Lovejoy
testified that she told Hayn and Shaw that her father had been
involved in an accident in 2000. Lovejoy said Hayn and Shaw never asked
her about GEICO. (According to Hayn and Shaw, Stephanian told them that
GEICO had paid property damage on the claim. One would have expected them
to ask Lovejoy about this.) Lovejoy emphatically denied under oath having
told Hayn and Shaw that her father was senile and did not drive. Dick (who
was almost 72 years old at the time of the July 2000 accident) testified
that he had been driving for many years, that he was still driving in 2000
and 2001, and that he currently has a valid license. (Some controversy
exists regarding the status of Dick’s driver’s license. That controversy
does not substantially affect Lovejoy’s credibility. California Department
of Motor Vehicle records [Ex. 2] show that Dick’s license was suspended on
December 22, 2002 [reason: “negligent operator”] and revoked as of April
15, 2003 [reason: “lack of knowledge or skill”]. The DMV records also
indicate that notices of the suspension and revocation were mailed to Dick
at his Beverly Hills address and “not returned unclaimed.” The DMV
printout further states “verbal or personal service needed.” Dick did have
a valid license in 2000 and 2001. In his testimony, Dick [now 76] did not
appear to be senile or to suffer from dementia. Dick’s claim to have a
current valid license calls his credibility into question. As Lovejoy does
not live with her father, it is unclear whether she knows that his license
was suspended in late 2002.) 9.
Lovejoy testified that she does not know Feinstein and had never seen him
before the hearing. Lovejoy told Hayn and Shaw on February 1, 2001, that
she had received a letter from CNA in July 2000 regarding an auto accident
but that she threw it away. (Lovejoy said that her name apparently appears
in Dick’s insurance records with CNA because she co-signed for his car
loan.) Hayn and Shaw wrote a statement that they had Lovejoy sign. (Ex.
X.) Shaw wrote, “I do not know Jacob Stephanian nor have I been contacted
by anyone with regards to an alleged accident in or about July 2000.”
(Id) When asked why he wrote that Lovejoy had not been “contacted
by anyone” when in fact she had received a letter, Shaw said that, to him,
“contact” meant a personal visit or a telephone call. (Because the People
produced this document after the court already had excused Lovejoy as a
witness, she was not asked about it.) Hayn and Shaw offered no explanation
for their failure to ask Stephanian about a July accident after speaking
with Lovejoy. 10.
Shaw testified that, shortly after meeting with Amanda Lovejoy, he called
the telephone number she gave him for Al Dick. (Lovejoy testified that
Hayn and Shaw did not ask her for Dick’s address or telephone number. She
could not recall whether she gave them that information despite the lack
of a request.) Shaw stated that the person who answered sounded senile and
“made no sense.” Shaw testified that he did not tell Hayn or anyone else
about this call at the time -- indeed, that he had never spoken of it to
anyone until his testimony at the Franks hearing. Neither Hayn nor
Shaw checked with the DMV in February 2001 (or at any time since) to
determine whether Dick had a valid driver’s license. Shaw did not credibly
explain why Dick would have had auto insurance if he had not driven for
many years.
11. Many aspects of Stephanian’s story about the “paper-staged”
October accident are objectively illogical. Reasonable law enforcement
officers and private investigators would have recognized these weaknesses
in Stephanian’s information, especially after meeting with Amanda Lovejoy
as Hayn and Shaw did before signing the affidavit.
If Lovejoy were supposed to be the driver at fault, why would Stephanian’s
insurer (GEICO) have paid the property damage? If Lovejoy were insured by
20th Century, why would CNA, her father’s carrier, have paid
the personal injury damages (or anything else on the claim)? CNA would
have paid only if Dick, not Lovejoy, had been driving. How did Feinstein
and Stephanian choose Amanda Lovejoy to be the other driver in the
paper-staged collision? If she were an innocent victim, the fraud readily
would have come to light when GEICO and/or CNA contacted Lovejoy to obtain
her version of the accident. Lovejoy then would have told the insurance
companies that there had been no accident. (Shaw testified that he
believed Lovejoy was “in collusion” with Feinstein and Stephanian, but
there is no evidence of this.) Once Lovejoy talked about an accident in
July, not October — and signed a statement written by Shaw denying her
involvement in a collision in July 2000 — why did Hayn and Shaw continue
to refer to an October 2000 paper-staged collision in their
affidavit?
12. As far as the record shows, Hayn and Shaw never asked why -- if
Stephanian and Rouhel Feinstein were friends and had jointly participated
in an insurance fraud scheme -- Stephanian referred to him as “Steinberg”
rather than “Feinstein.” Hayn testified that she never asked Stephanian
how he knew Feinstein, how they had met, or how long they had been
friends. 13.
Hayn’s and Shaw’s affidavit implies that Stephanian gave them the name
“Amanda Lovejoy” at the McDonald’s meeting. (“Current Investigation” at
9.) However, neither Hayn nor Shaw wrote that name in their notes. (See
Exs. D, S.) Hayn testified that Stephanian gave her the name “Amanda
Lovejoy” at the meeting and that all of the information attributed to
Stephanian in the affidavit came from the McDonald’s meeting. (Reporter’s
Transcript, May 18, 2004, at page 17, lines 23-27, and page 54,
lines 2-5.) Shaw, by contrast, testified that Stephanian did not tell
Shaw and Hayn Lovejoy’s name at the meeting. Shaw stated that he later
called Stephanian for “clarification” of certain points. Much of what Hayn
and Shaw testified Stephanian told them at McDonald’s does not appear in
their notes of that meeting.
14. Hayn and Shaw testified that, at the McDonald’s meeting,
Stephanian told them that “Steinberg” had referred him and Ulicna to
Nicole Javaherian. Their affidavit, however, states only that Stephanian
“was referred” — passive voice — to Javaherian. Hayn’s notes of the
meeting include the notation that Javaherian was a “girlfriend of someone
in Attorney’s office - Richard.” (Ex. D.) This appears to be a reference
to Richard Debro, Stephanian’s lawyer in his federal criminal case and the
person who represented him and Ulicna in their personal injury claim
against Dick and CNA arising from the July collision. Shaw’ s notes also
state “Attorney Richard Debrow [sic] — Nicole is girlfriend of Richard’s
secretary.” (Ex. S.) It seems considerably more likely that Debro’ s
office, not Feinstein, referred Stephanian and Ulicna to
Javaherian.
15. Hayn testified on May 18 and July 23, 2004, that she
still believed Stephanian had given her truthful information and that the
accident was only a paper-staged one. However, on July 26, 2004, Hayn
testified that she no longer believed the accident to have been
paper-staged. Hayn could not explain this weekend reversal. Hayn’s
180-degree turn on this central issue is extremely
troubling. Discussion Standing
The
defendants have standing to bring the motion to traverse and quash the
warrant. - Feinstein testified at the hearing that he and his wife (and
co-defendant) Marilyn live at the residence that was searched in
accordance with the warrant. Feinstein stated that he and his wife are the
sole residents of the front house at the property.
Feinstein also testified that he was the lessee of Silver Arrow and
of Van Nuys Motors. Feinstein’s partner Frank Kis worked at Silver Arrow,
but Feinstein was the sole lessee. (There was no sublease to Kis.)
Feinstein testified that he did not “physically work at” Silver Arrow but
that he went there often and kept papers in the office he shared with Kis.
Feinstein testified that he had an office at Van Nuys Motors, that he went
there every morning, and that he spent the majority of his day
there.
This testimony was uncontradicted. Franks,
Leon. and Other Governing Cases
In
Franks v. Delaware (1978) 438 U.S. 154, the United States Supreme
Court held that a criminal defendant may challenge the truthfulness of
factual statements made in an affidavit supporting a warrant. Id at
155. The defendant must make “a substantial preliminary showing” that the
affidavit contained “a false statement [made] knowingly and intentionally,
or with reckless disregard for the truth.” Id at 155-56. If
the allegedly false statement was “necessary to the finding of probable
cause, the Fourth Amendment requires that a hearing be held at the
defendant’s request.” Id. at 156. If the defendant proves by a
preponderance of the evidence that the affiant committed perjury or acted
in reckless disregard of the truth, the court must set the affidavit’s
false material to one side. Id If the affidavit’s remaining content
is insufficient to establish probable cause, the court must void the
search warrant and exclude the fruits of the search “to the same extent as
if probable cause was lacking on the face of the affidavit.”
Id
The
Franks rule is a narrow one. Affidavits supporting search warrants
enjoy a presumption of validity. 438 U.S. at 171. Allegations of
negligence or innocent mistake are insufficient to warrant a Franks
hearing. Id Moreover, “[t]he deliberate falsity or reckless
disregard whose impeachment is permitted. . . is only that of the affiant,
not of any nongovernmental informant.” Id. In
United States v Leon (1984) 468 U.S. 897, decided six years after
Franks, the Supreme Court held that the exclusionary rule should
not be applied when the officer conducting the search acted in objectively
reasonable reliance on a warrant issued by a detached, neutral magistrate
even if the warrant later was determined to be invalid. Id at
922-32. The Leon Court recognized, however, that suppression would
remain an appropriate remedy in four situations. One of those is “if the
affiant misled the magistrate or judge with information that the affiant
knew or should have known was false.” People v. Maestas (1988) 204
Cal.App.3d 1208, at 1214 (citing Leon, 468 U.S. at 923). “Leon
instructs that suppression is still the proper remedy ‘if the officers
were dishonest or reckless in preparing their affidavit or could not have
harbored an objectively reasonable belief in the existence of probable
cause.” 204 Cal.App.3d at 1214 (quoting 468 U.S. at 926). “[O]bjective
reasonableness must be judged as of the time the warrant is sought and
without consideration of the fact that the magistrate accepted the
affidavit.” 204 Cal.App.3d at 1214 (citing Malley v. Briggs (1986)
475 U.s. 335). Governing
Law Requires that the Search Warrants Here Be
Quashed The
Evidence that Hayn’s and Shaw’s Statements Were Knowingly False or Made
in Reckless
Disregard of
their Truth Preponderates
Applying the governing authorities to the facts here, the
defendants have proved by a preponderance of the evidence that Hayn and
Shaw intentionally omitted material facts from their affidavit. The
defendants also have proved that Hayn and Shaw made statements in their
affidavit that they knew were false or that they made in reckless
disregard of the truth. Hayn and Shaw did not disclose to the magistrate
that Stephanian was facing sentencing on a felony drug charge, that he had
been arrested for grand theft twice while awaiting sentencing, and that
Hayn was concerned Stephanian might leave for Canada. Moreover, the entire
premise of the affidavit was that Stephanian had participated in a
paper-staged collision orchestrated by Feinstein, and that the fake
collision had been said to have occurred in October 2000 and to have
involved Amanda Lovejoy and her Acura. All of this was false: the
collision actually had taken place, it occurred in July, and the other
driver was Alvin Dick. Omissions:
Hayn
and Shaw intentionally omitted from the affidavit the facts that
Stephanian was awaiting sentencing on a federal drug trafficking charge,
that he was seeking consideration in the sentencing on that case, and that
he had been arrested not once but twice for felony theft crimes while out
on bail pending sentencing. Stephanian certainly had a motive to provide
accurate information: favorable treatment in his own case. That
conclusion, however, presumed that Stephanian would stay in California and
be sentenced. Once Hayn became concerned that he would flee, her concern
was a further material fact that should have disclosed in the
affidavit.
Even apart from the fear of Stephanian’ s flight, his criminal
record and his status
awaiting sentencing and facing a substantial prison term —
seriously impeached his credibility and reliability. Hayn is an
experienced police officer. Experienced police officers know the
difference between citizen informants and “snitches.” While citizen
informants are generally presumed to be reliable, “[hong settled law
already creates a strong inference that information from police contacts
is to be viewed with extreme caution,” not only because of “the usual
distrust of hearsay evidence” but also because of “an assumption that
information provided by customary police sources is inherently suspect.”
People v. Kurland(1980) 28 Cal. 3d 376, at 392. The California
Supreme Court observed in Kurland that “[s]uch persons frequently
have criminal records and a history of contact with the police. Often they
are free only on probation or parole or are themselves the focus of
pending criminal charges or investigations. All familiar with law
enforcement know that the tips they provide may reflect their
vulnerability to police pressure or may involve revenge, braggadocio,
self-exculpation, or the hope of compensation.” Id. at 393. See
also Maestas, 204 Cal. App. 3d at 1212-13, 1219 (trial court should
have conducted Franks hearing where officer’s affidavit in support
of search warrant “failed to inform the magistrate that [informant
regarding defendant’s cocaine sales] had suffered four previous felony
convictions” and that second informant had been arrested for burglary as
well as drug possession and was facing charges; officer also “fail{ed] to
independently verify the information relied upon”; “defects and
inconsistencies [in affidavit] suggest [officer] sought to create the
false impression of informant reliability”). Knowingly
or Recklessly False Statements:
The
central thesis of Hayn’ s and Shaw’ s affidavit was false. That central
thesis was that there was a “paper-staged” accident that was not real. In
fact, there were two accidents, in July and October 2000, and both were
real. The issues therefore are whether an objectively reasonable officer
in Hayn’s position would have relied on Stephanian’s story, whether the
information he provided was detailed enough to be self-verifying, and
whether there were logistical or other reasons why Hayn and Shaw could not
have obtained verification from other sources. See People v.
Maestas, 204 Cal.App.3d at 1220-21. Stephanian
was unknown to Hayn and Shaw. While he came with recommendations from
Schwark and Williams, they both had worked with him for relatively brief
periods at the time. The information he had provided to them had nothing
to do with insurance fraud. Williams emphasized that, before accepting
anything that Stephanian told him, Williams would undertake investigation
to corroborate Stephanian’s claims. In
any event, no matter how reliable an informant Stephanian might have been
for Schwark and Williams in the past, Hayn’s admitted fear that Stephanian
would run to Canada proves that Hayn knew Stephanian was unreliable with
respect to the information he had given her and Shaw regarding
“Steinberg.” In short, Hayn swore in her affidavit that Stephanian was
reliable at the same time she believed that Stephanian was not
reliable. Nor
was Stephanian’s story sufficiently detailed to be self-verifying. He did
not say to whom he owed money or how much, he had Feinstein’s name wrong,
he gave no specific date or place of the allegedly paper-staged accident,
he did not say how Lovejoy became involved or how he or Feinstein chose
Lovejoy, he did not say who rear-ended whom in the collision, he did not
indicate which “insurance company” paid him or how much, and he provided
no information regarding the GEICO adjuster with whom Feinstein allegedly
worked. Stephanian’s story did not add up. Hayn testified that she
conducted no investigation of Stephanian’s bonafides other than
speaking with Williams and Schwark. Her only conversation with Stephanian
was the one- to two-hour meeting at McDonald’s. Hayn had no follow-up
conversations with Stephanian before submitting the
affidavit.
The only actions Hayn and Shaw took to corroborate Stephanian’s
story were (1) to visit Amanda Lovejoy; (2) to ask Sandy Ricard — when he
came to see them about Javaherian and Raftari -- to check GEICO’s records
for any claim for an October 2000 collision; and (3) to run a fictitious
business name check for Silver Arrow. Hayn did not interview Eva Ulicna;
instead, she took at face value Stephanian’ s statement that Ulicna was
“unavailable.” Hayn did not make inquiries of CNA, 20th
Century, or any other insurance company. Shaw testified that he called CNA
and that they could find no record of any claim involving
Stephanian. His testimony on this point was quite vague. It also was
undercut by Hayn’s testimony that, if Shaw had contacted CNA, he probably
would have told her, and he did not.
Amanda Lovejoy credibly denied making the statements that Hayn and
Shaw now attribute to her. Had Hayn and Shaw visited or called Alvin Dick
(Shaw’s testimony that he called Dick was not credible), they would have
learned that the collision occurred in July 2000 and that it was real. Had
they checked with CNA, they would have learned the same thing.
Ricard either mistakenly told Hayn and Shaw that GEICO had paid the
property damage on the claim arising from the October accident or he never
told them that at all. GEICO
had not paid anything on either the July or October accident at the time,
nor did it ever do so. Ricard testified that he had no idea whether GEICO
was involved with a claim concerning Lovejoy, and that he did not remember
what accident dates he discussed with Hayn and Shaw. In considering
Ricard’s testimony, the court takes into account that Ricard has worked
for approximately eleven years for a company owned by Scott Shaw’s father.
Ricard worked only briefly for GEICO — for about fifteen months — between
December 1999 and March 2001, leaving GEICO to return to the Shaw company
shortly after the date the affidavit was submitted to the magistrate.
Ricard testified that he and Scott Shaw had been “good friends” when they
worked together, and that they were still friends. Shaw testified that he
and Ricard have been good friends for a long time.
It is undisputed that Rouhel Feinstein was operating Silver Arrow
at the relevant times. But the only links between Silver Arrow and any
alleged insurance fraud were (1) that Silver Arrow had “inspected”
Raftari’s car in the February 2000 claim; (2) that Silver Arrow had
repaired a car for John Roper, a suspected organized crime associate, in
October 2000; and (3) that Garo Momdjian had at some time filed a
fictitious business name statement for Silver Arrow or for another
business at that address. These are tenuous connections at best. Shaw
testified that he did not know whether Silver Arrow’s repair of Roper’s
car was in connection with a fraudulent claim. In a written statement
dated October 30, 2000, Momdjian stated that a Sam Lahooti had arranged
the fraud in which he participated. (Ex. V.) There is no mention of
Feinstein or any suggested link between Feinstein and
Lahooti. The
failure of officers to corroborate information provided by an informant
whose veracity and knowledge have not been directly established may
indicate the absence of objective reasonableness by the officers to
believe in the existence of probable cause. Maestas, 204 Cal. App.
3d at 1221. See also People v. Johnson (1990) 220 Cal.App.3d 742,
at 750 (officer’s failure to corroborate evidence received from anonymous
informant did not meet standard of objective reasonableness; officer
failed to establish informant’s veracity or basis of knowledge directly,
informant’s information as to alleged criminal activity was not
self-verifying, and no reason existed for failure to obtain
corroboration). Had Hayn and Shaw obtained the CNA claim file, they would
immediately have seen that Dick rear-ended Stephanian in an actual
collision in July 2000, that Dick’s carrier CNA paid both the property
damage and the personal injury on the claim, and that Richard Debro, not
Feinstein, made the claim on Stephanian’s behalf. There was no urgency in
submitting the affidavit: Hayn cited no concern that Feinstein would flee,
that evidence would be destroyed, or that public safety was in imminent
peril. The sole reason Hayn gave for her rush to submit the affidavit
before she and Shaw had received the CNA claim file — that Stephanian
might leave the country — demonstrated her belief that her informant was
unreliable.
While some of the errors in the affidavit are more significant than
others, “misstatements or omissions in the affidavit may bear upon whether
the officer’s belief in the existence of probable cause was objectively
reasonable regardless of whether they were material to the magistrate’s
probable cause determination under Franks.” Maestas, 204 Cal.App.3d
at 1216 (citing United States v. Boyce (D. Minn. 1985) 601 F. Supp.
947, 955). “Whether a well-trained officer could have harbored such
an objectively reasonable belief may turn on whether the officer’s
affidavit contains any misstatements or omissions, as an officer who
misrepresents the facts to the magistrate has less reason to believe in
the existence of probable cause than an officer who makes no such
misrepresentations.” Id
Hayn’s
and Shaw’s refusal to permit a deputy district attorney to read their
affidavit before they submitted it to the magistrate calls their motives
into serious question. Seeking the assistance of a deputy district
attorney reflects good faith. Courts encourage officers to obtain the
advice and assistance of other professionals, especially when they intend
to seek judicial permission to interfere with the Fourth Amendment rights
of other people. Cf Massachusetts v. Sheppard(1984) 468 U.S. 981,
989 (police detective’s conduct was objectively reasonable under Leon
where detective showed search warrant affidavit to district attorney,
and magistrate, not detective, created error in search warrant); United
States v. Alvarez (5th Cir. 1997) 127 F.3d 372, 375
(law enforcement officer’s statement in search warrant affidavit
demonstrated reckless disregard for truth; court emphasized officer’s many
years of experience, lack of exigency, and failure to “consult with any
attorney”); Los Angeles Police Protective League v. Gates (9th
Cir. 1990) 907 F.2d 879, 888 (discussing immunity in civil rights
suit; defendant officer consulted assistant city attorney regarding
administrative search warrant); US. v. Frietas (9th Cir.
1988) 856 F.2d 1425, 1431 (federal agent contacted Assistant United States
Attorney who then worked with him to prepare search warrant
affidavit). The
Corrected Affidavit Fails To Establish Probable
Cause
If the defense proves that the affiant’ s statement was
deliberately or recklessly false, the court must determine whether the
challenged statement or omission was essential to the magistrate’s finding
of probable cause. Franks, 438 U.S. at 156. Franks envisions
two types of correction: “(1) material misstatements are stricken and (2)
material omissions are added.” People v. Costello (1988) 204
Cal.App.3d 431, at 443. “The aim in either case is not punitive but
remedial — to make the affidavit read as it should have so that the
reviewing court can then retest for probable cause support.” Id
(citing numerous cases). Once Hayn’s and Shaw’s affidavit is corrected
to include the facts regarding Stephanian’s criminal case and to excise
the false statements, it plainly fails to establish probable cause for the
search warrant. The People conceded this point before the
hearing. Conclusion
“The
discharge, unpunished, of guilty defendants exacts an enormous price from
society. Consequently, the sanction of suppressing relevant evidence
should be reserved for cases of the most serious misconduct committed by
agents of the commonwealth.” People v. Wilson (1986) 182 Cal.App.3d
742, at 750. The purpose of the exclusionary rule is to deter police
misconduct. The exclusionary rule is “an incentive for the law enforcement
profession as a whole to conduct themselves in accord with the Fourth
Amendment.” Illinois v. Gates (1983) 462 U.S. 213, at 261. This is
one of the “rare day[s] indeed” when the record and the law require that
the defendants’ motion be granted. Wilson, 182 CaI.App.3d at
750.
The defendants’ motion to traverse and quash the search warrants
for the Feinsteins’ residence and for Rouhel Feinstein’s work places is
granted. The evidence seized at those locations pursuant to the warrant is
ordered suppressed under Penal Code section 1538.5
IT
IS SO ORDERED. Dated:
September 22, 2004
__________(signature)________
Anne H. Egerton Judge, Los Angeles
Superior
Court |