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United States v. Kanodia

United States District Court, D. Massachusetts

June 6, 2016

UNITED STATES OF AMERICA, Government,
v.
AMIT KANODIA, Defendant.

          MEMORANDUM & ORDER

          Nathaniel M. Gorton United States District Judge

         Defendant Amit Kanodia ("Kanodia" or "defendant") has been indicted for Conspiracy to Commit Securities Fraud (Count 1) for allegedly conspiring in 2013 to engage in insider trading of shares of Cooper Tire & Rubber Company ("Cooper Tire"), all in violation of 15 U.S.C. § 78j(b) and 78ff(a), 18 U.S.C. § 371 and 17 C.F.R. § 240.10b-5 ("Rule 10b-5"). Kanodia has also been indicted on 18 counts of securities fraud (Counts 2-19) in violation of 15 U.S.C. § 78j(b) and 78ff(a), 18 U.S.C. § 2 and Rule 10b-5.

         Pending before the Court is Kanodia’s motion to suppress evidence that the government obtained pursuant to a search warrant directed to Network Solutions, LLC ("Network Solutions") for e-mail communications and account data associated with the e-mail address AK@LincolnVentures.com. For the reasons that follow, that motion will be denied.

         I. Background

         A. Parties

         Kanodia is charged with engaging in insider trading after misappropriating material, nonpublic information that he obtained from his wife, the General Counsel of Apollo Tyres, Ltd. ("Apollo"), concerning an anticipated merger between Apollo and Cooper Tire. Kanodia purportedly disclosed that information to co-defendant Iftikar Ahmed ("Ahmed" or "co-defendant") and family friend Steven Watson ("Watson") with the understanding and intent that they use the inside information to trade in shares of Cooper Tire and share their profits with him.

         The indictment alleges that Ahmed and Watson then began accumulating Cooper Tire shares and call options in April, 2013 and continued doing so until shortly before the public announcement of the merger in June, 2013. Ahmed and Watson allegedly sold their interests in Cooper Tire within a few days after the announcement and collectively garnered over one million dollars in proceeds.

         In early August, 2013, Kanodia sent Ahmed an e-mail with the subject line of "Wire Instructions" from the AK@LincolnVentures.com e-mail account. He wrote:

         Hope all is well. Finally we have all the documents in place . . . The entity is:

Lincoln Charitable Foundation Bank of America Account # ********7712 .
ABA: *****9593
West 33rd Street, New York, NY Telephone 617 713 6301

         The government explains that 1) the e-mail was signed "Salaam. amit", 2) "bhai" is an Indian term for "brother", 3) "salaam" is a salutation meaning "peace" and 4) both Kanodia and Ahmed had ties to India.

         During its investigation, the government applied for a warrant to search the AK@LincolnVentures.com e-mail account for evidence, fruits and instrumentalities of wire fraud, securities fraud and conspiracy. The warrant application included an affidavit from a Federal Bureau of Investigation ("FBI") agent that 1) summarized the alleged insider trading scheme and the relationship between the participants, 2) described the August, 2013 e-mail that Kanodia sent to Ahmed from the account, 3) outlined the procedures for executing the search warrant and 4) identified the "Accounts and Files to Be Copied by Network Solutions Personnel" and the "Records and Data to [B]e Searched and Seized by Law Enforcement Personnel". Magistrate Judge Marianne B. Bowler approved and issued the search warrant in October, 2014.

         An FBI agent served a copy of the warrant on Network Solutions. The government received a disk of materials from Network Solutions and produced a copy of those materials to Kanodia in discovery.

         In February, 2016, Kanodia moved to suppress "any substantive communications, or any fruits of such evidence, " that the government unlawfully seized pursuant to the Network Solutions search warrant.

         II. Motion to suppress

         A. Legal standard

         The Fourth Amendment of the United States Constitution protects against unreasonable searches and seizures. U.S. Const. amend. IV. Law enforcement officers must generally secure a warrant supported by probable cause before conducting a search or seizure. United States v. Gifford, 727 F.3d 92, 98 (1st Cir. 2013). Under the particularity requirement, a search warrant 1) must include sufficient information to guide and control the judgment of the executing officer in deciding where to search and what to seize and 2) cannot be overbroad or include items that should not be seized. United States v. Kuc, 737 F.3d 129, 133 (1st Cir. 2013).

An application for a search warrant must establish probable cause to believe that (1) a crime has been committed - the "commission" element, and (2) enumerated evidence of the offense will be found at the place to be searched - the so-called "nexus" element.

United States v. Feliz, 182 F.3d 82, 86 (1st Cir. 1999). With respect to the nexus element, the magistrate judge must consider the totality of the circumstances and make a "practical, common-sense decision" as to whether there is a "fair probability" that evidence of a crime will be found in a particular place. Id. The party seeking the warrant must present facts that would "warrant a man of reasonable caution to believe that evidence of a crime will be found" but need not show that such a belief is correct or more likely true than false. Id.

         A reviewing court must treat with "considerable deference" the determination of the magistrate judge that the warrant application established probable cause. Id. The proper inquiry on review is whether the magistrate judge had a "substantial basis for concluding that probable cause existed." Id. (internal quotation marks omitted). The reviewing court should resolve doubtful or marginal cases in favor of the magistrate ...


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