Court filing
Opposition to Notice of Motion and Motion to Suppress — USA v. Ayvazyan et al. (Dkt. 152, C.D. Cal.)
Filed March 15, 2021 in USA v. Ayvazyan et al.; one of 233 filings from this case.
Record facts
| Court | U.S. District Court for the Central District of California |
|---|---|
| Filed | 2021-03-15 |
U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 152 · 2021-03-15 · Docket on CourtListener
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TRACY L. WILKISON
Acting United States Attorney
BRANDON D. FOX
Assistant United States Attorney
Chief, Criminal Division
SCOTT PAETTY (Cal. Bar No. 274719)
BRIAN FAERSTEIN (Cal. Bar No. 274850)
Assistant United States Attorneys
Major Frauds/Environmental and Community Safety Crimes Sections
1100/1300 United States Courthouse
312 North Spring Street
Los Angeles, California 90012
Telephone: (213) 894-6527/3819
Facsimile: (213) 894-6269/0141
E-mail:
Scott.Paetty@usdoj.gov/Brian.Faerstein@usdoj.gov
DANIEL A. KAHN
Acting Chief, Fraud Section
Criminal Division, U.S. Department of Justice
CHRISTOPHER FENTON
Trial Attorney, Fraud Section
Criminal Division, U.S. Department of Justice
1400 New York Avenue NW, 3rd Floor
Washington, DC 20530
Telephone: (202) 320-0539
Facsimile: (202) 514-0152
E-mail:
Christopher.Fenton@usdoj.gov
Attorneys for Plaintiff
UNITED STATES OF AMERICA
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
RICHARD AYVAZYAN,
aka “Richard Avazian” and
“Iuliia Zhadko,”
MARIETTA TERABELIAN,
aka “Marietta Abelian” and
“Viktoria Kauichko,”
ARTUR AYVAZYAN,
aka “Arthur Ayvazyan,” and
TAMARA DADYAN,
MANUK GRIGORYAN,
aka “Mike Grigoryan,” and
“Anton Kudiumov,”
ARMAN HAYRAPETYAN,
EDVARD PARONYAN,
No. CR 20-579(A)-SVW
GOVERNMENT’S CONSOLIDATED
OPPOSITION TO DEFENDANT AYVAZYAN’S
AND DEFENDANT TERABELIAN’S MOTIONS
TO SUPPRESS (ECF 130, 135, 136);
DECLARATIONS OF SCOTT PAETTY AND
TIMOTHY MASSINO; EXHIBITS
Case 2:20-cr-00579-SVW Document 152 Filed 03/15/21 Page 1 of 32 Page ID
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aka “Edvard Paronian” and
“Edward Paronyan,” and
VAHE DADYAN,
Defendants.
Hearing Date: April, 12, 20211
Hearing Time: 11:00 a.m.
Location:
Courtroom of the
Hon. Stephen V.
Wilson
Plaintiff United States of America, by and through its counsel
of record, the Acting United States Attorney for the Central District
of California and Assistant United States Attorneys Scott Paetty and
Brian Faerstein, and United States Department of Justice Trial
Attorney Christopher Fenton, hereby files its Consolidated Opposition
to defendant Richard Ayvazyan’s and defendant Marietta Terabelian’s
Motions to Suppress (ECF Nos. 130, 135, 136).
This opposition is based upon the attached memorandum of points
and authorities, the Declaration of Scott Paetty and attached
//
//
11 Defendants noticed a hearing on these motions for April 5,
2021. However, defendant Richard Ayvazyan subsequently filed a
separate motion to suppress (ECF 146) and noticed a hearing on that
motion for April 12, 2021. To foster the efficient use of the
Court’s resources, the government respectfully requests that any
hearing on these motions be consolidated to the later date, or at a
time thereafter that is convenient for the Court.
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exhibits, the Declaration of Timothy Massino, the files and records
in this case, and such further evidence and argument as the Court may
permit.
Dated: March 15, 2021
Respectfully submitted,
TRACY L. WILKISON
Acting United States Attorney
BRANDON D. FOX
Assistant United States Attorney
Chief, Criminal Division
/s/
SCOTT PAETTY
BRIAN FAERSTEIN
Assistant United States Attorneys
CHRISTOPHER FENTON
Department of Justice Trial Attorney
Attorneys for Plaintiff
UNITED STATES OF AMERICA
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TABLE OF CONTENTS
DESCRIPTION
PAGE
MEMORANDUM OF POINTS AND AUTHORITIES................................1
I.
INTRODUCTION...................................................1
II.
STATEMENT OF FACTS.............................................2
A.
The Investigation.........................................2
B.
The Border Stop in Miami International Airport............3
C.
Defendants’ Arrest and Subsequent Search Warrants.........4
D.
Indictment and First Superseding Indictment...............5
III. ARGUMENT.......................................................5
A.
The Searches and Seizures at Miami International
Airport were Valid Exercises of the Government’s
Border Search Authority...................................5
1.
The Seizure of Credit Cards in the Names of
Iuliia Zhadko and Viktoria Kauichko was Justified....8
2.
The Manual Search of Defendants’ Digital Devices
and Seizure of Digital Contraband was Justified......9
B.
The Good Faith Exception Applies to the Manual Search
of the Digital Devices in Miami Consistent With
Controlling Eleventh Circuit Precedent...................13
C.
The Government Obtained Valid Warrants to Search the
Digital Devices Seized from Defendants in Miami and to
Search Defendants’ and Co-conspirators’ Residences.......16
D.
Defendants Were Not Entitled to Miranda Warnings Prior
to Secondary Screening...................................19
IV.
CONCLUSION....................................................25
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TABLE OF AUTHORITIES
DESCRIPTION
PAGE
Federal Cases
Davis v. United States,
564 U.S. 229, 237-39, 241, 249-50 (2011) .............. 13, 15, 16
Messerschmidt v. Millender,
565 U.S. 535, 556 (2012) ...................................... 19
Riley v. California,
573 U.S. 373 (2014) ........................................... 15
Santos-Pineda v. Axel, No. CV 10-6285 MMM,
2011 WL 13103995 (C.D. Cal. July 26, 2011) .................... 10
Sash v. United States, No. 09 Civ. 450,
2009 WL 3007379 (S.D.N.Y. Sept. 22, 2009) ..................... 10
Torres v. Commonwealth of P.R.,
442 U.S. 465, 472-73 (1979) .................................... 5
United States v. Arnold,
533 F.3d 1003, 1007 (9th Cir. 2008) ............................ 8
United States v. Barragan,
589 F. Supp. 2d 1012, 1015-16 (S.D. Ind. 2008) ................ 14
United States v. Bengivenga,
845 F.2d 593, 599 (5th Cir. 1988) ............................. 21
United States v. Bolar,
569 F.2d 1071, 1072 (9th Cir. 1978) ........................... 10
United States v. Cano,
934 F.3d 1002, 1011-20 (9th Cir. 2019) .................... passim
United States v. Chavez-Martinez,
407 F.2d 535, 539 (9th Cir. 1969) ............................. 22
United States v. Cotterman,
709 F.3d 952 (9th 2013) .................................... 7, 15
United States v. Driver,
776 F.2d 807, 811-12 (9th Cir. 1985) .......................... 19
United States v. Fernandez-Ventura,
132 F.3d 844, 846 (1st Cir. 1998) ............................. 21
United States v. FNU LNU,
653 F.3d 144 (2d Cir. 2011) ................................... 21
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TABLE OF AUTHORITIES (CONTINUED)
DESCRIPTION
PAGE
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United States v. Galloway,
316 F.3d 624 (6th Cir. 2003) .................................. 21
United States v. Gates, No. CR 08-42-P-H,
2008 WL 5382285 (D. Me. Dec. 19, 2008) ........................ 14
United States v. Gerena,
667 F. Supp. 911, 927 (D. Conn. 1987) ......................... 14
United States v. Gupta,
183 F.3d 615 (7th Cir. 1999) .................................. 21
United States v. Guzman-Padilla,
573 F.3d 865, 883-34 (9th Cir. 2009) .......................... 22
United States v. Harrell,
530 F.3d 1051, 1057 (9th Cir. 2008) ........................... 10
United States v. Hassanshahi,
75 F. Supp. 3d 101, 117 (D.D.C. 2014) .......................... 7
United States v. Kennedy, No. CR 13-240,
2014 WL 6090409 (W.D. Pa. Nov. 13, 2014) ...................... 14
United States v. Kiam,
432 F.3d 524 (3d Cir. 2006) ................................... 21
United States v. Leon,
468 U.S. 897, 920-21 (1984) ................................... 16
United States v. Levy,
803 F.3d 120, 123 (2d Cir. 2015) ............................... 7
United States v. Moya,
74 F.3d 1117, 1119-20 (11th Cir. 1996) .................... 21, 22
United States v. Nava,
363 F.3d 942, 946 (9th Cir. 2004) ............................. 22
United States v. Ocheltree,
622 F.2d 992 (9th Cir. 1980) ................................... 12
United States v. Ozuna,
170 F.3d 654, 658 (6th Cir. 1999) ..................... 22, 23, 25
United States v. Reid,
226 F.3d 1020 (9th Cir. 2000) ................................. 12
United States v. Reyes,
631 F.2d 616, 622 (9th Cir. 1980) ......................... 22, 24
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TABLE OF AUTHORITIES (CONTINUED)
DESCRIPTION
PAGE
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United States v. Schoor,
597 F.2d 1303, 1306 (9th Cir. 1979) ......................... 6, 7
United States v. Touset,
890 F.3d 1227, 1233-34 (11th Cir. 2018) ....................... 15
United States v. Vasey,
834 F.2d 782, 788 (9th Cir. 1987) ............................. 18
Federal Statutes
6 U.S.C. §§ 202, 211 .............................................. 7
8 U.S.C. § 1225(a)(5) ............................................ 22
18 U.S.C. § 1029(a) ............................................... 8
18 U.S.C. § 1029(e)1) ............................................. 8
19 U.S.C. § 1582 ................................................. 22
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MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION
Defendant Richard Ayvazyan (“Ayvazyan”) and his wife Marietta
Terabelian (“Terabelian”) (collectively, “defendants”) orchestrated a
vast fraud ring that used an array of fake businesses, aliases, and
stolen identities, to steal tens of millions of dollars from the
Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan
Program (“EIDL”)---federal loan programs which were intended to
assist struggling businesses during the COVID-19 pandemic.
Defendants then impermissibly used the disaster relief funds for
their own personal use and enjoyment, including to buy luxury homes,
gold coins, diamonds, jewelry, luxury watches, fine imported
furnishings, designer handbags and clothing, cryptocurrency, and
securities.
Defendants now seek to suppress items that were legally seized
from them at the airport in Miami, Florida, as they returned to the
United States from a luxury vacation in Turks and Caicos, including
credit cards in the names of “Iuliia Zhadko” and “Viktoria Kauichko,”
two fake identities used by defendants to carry out the loan fraud
scheme, as well as digital contraband in the form of numerous images
of drivers’ licenses, personal identification documents, and credit
cards in an assortment of names. The border search of defendants,
the seizure of physical and digital contraband, the interviews of
defendants during the border stop, and the search warrants that were
subsequently obtained on the devices and defendants’ residence were
conducted lawfully and comported with the constitution, and therefore
defendants’ motions to suppress (ECF 130, 135, 136) should be denied.
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II.
STATEMENT OF FACTS
A.
The Investigation
In June 2020, the government opened an investigation into a Los
Angeles-based ring that was using stolen, fake, and synthetic
identities to fraudulently apply for COVID-19 relief funds.
(Declaration of Timothy Massino (“Massino Decl.”) ¶ 1.) The original
subjects included “Iuliia Zhadko” (later determined to be a fake
identity), who submitted fraudulent loan applications on behalf of
Top Quality Contracting and Turing Info Solutions. (Id. ¶ 2.) Among
other things, the driver’s license submitted in support of Zhadko’s
applications was fake. (Id. ¶ 3.)
Over the next four months, the government served over 200
subpoenas, obtaining information from federal and state agencies,
lenders, retail banks, and escrow companies, among others. (Id.
¶ 4.) The government identified additional fraudulent loan
applications, including one using the name “Viktoria Kauichko” (also
later identified as fake) submitted on behalf of Runyan Tax Services.
(Id. ¶ 5.) The government traced the funds and learned that the
proceeds had been funneled through various bank accounts, including
one in defendant Terabelian’s name, and had been used by her husband,
defendant Ayvazyan, to purchase luxury homes, including a $3.25
million mansion that defendants put in their own names. (Id. ¶ 6;
ECF 1.) Further investigation revealed that, in 2012, both
defendants had pled guilty to conspiracy to commit bank fraud for
their role in a similar scheme involving fraudulent loan
applications. See United States v. Ayvazyan, et al., 11-cr-180
(CDCA). The government identified them as targets and submitted
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their names to the Department of Homeland Security (“DHS”) TECS
System, which provides travel alerts. (Id. ¶ 7.)
B.
The Border Stop in Miami International Airport
On October 16, 2020, FBI SA Justin Palmerton received notice
that defendant Terabelian was traveling from Turks and Caicos to the
United States via the Miami International Airport (“MIA”). He
contacted Customs and Border Protection (“CBP”) to ask that she be
referred for secondary inspection, explaining she may be involved in
“the use of stolen/synthetic identities and businesses” and may be
“transporting fake id’s, gold or large amounts of cash.” (See
Declaration of Scott Paetty (“Paetty Decl.”), Ex. 1.)
On October 19, 2020, at around 3:30 p.m., defendants arrived at
MIA and were referred for secondary inspection. CBP Officers
conducted a search of defendants’ belongings and found (i) in
defendant Terabelian’s luggage, a credit card in the name of
“Viktoria Kauichko”; and (ii) in defendant Ayvazyan’s belongings, one
credit card in the name of “Runyan Tax Services/Viktoria Kauichko,”
and four credit cards in the name of “Iuliia Zhadko,” including cards
associated with “Top Quality Contracting” and “Turing Info
Solutions.” (Id., Exs. 2, 3.)
CBP Officers also conducted a “basic search” of defendant
Terabelian’s iPhone and one of defendant Ayvazyan’s five digital
devices.1 CBP provided defendants with a copy of the “Inspection of
Electronic Devices” tear sheet (Id., Exs. 5, 6), which explained that
1 CBP defines a “basic search” as a manual search, without the
aid of external equipment, that may be conducted with or without
suspicion. (Paetty Decl.; Ex. 4 at § 5.1.3.) An “advanced search”
involves the use of external equipment to conduct a forensic analysis
of the contents of a digital device. (See id. at § 5.1.4.)
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CBP had authority to search defendants’ digital devices and that, if
they did not provide passcodes, their digital devices could be
detained for inspection and returned at a later date (Id.; Ex. 7.)
Defendants both provided passcodes. (Id., Exs. 5, 6.) CBP Officers
notified their supervisors and documented the search. (Id.) The
basic search of defendants’ digital devices revealed digital
photographs of a driver’s license in the name of “Iuliia Zhadko” with
defendants’ home address, a social security card in Zhadko’s name,
and numerous other credit cards and driver’s licenses in various
names. (Id., Ex. 8.)
As part of the secondary inspection process, CBP Officers
interviewed defendants, including about information they provided on
a biographical questionnaire. (Id., Ex. 9.) The interviews were
memorialized in written reports and some portions were also video
recorded. (Id., Exs. 5, 6.)2
C.
Defendants’ Arrest and Subsequent Search Warrants
On October 20, 2020, at around 1:45 a.m., CBP admitted
defendants and turned them over to the FBI, who made a probable cause
arrest. (Id., Ex. 10.) Later that day, the government filed a
complaint against defendants, alleging conspiracy to commit bank and
wire fraud. (ECF 1.) The government subsequently obtained warrants
to search the six digital devices seized incident to defendants’
arrest and seven premises (including two of defendants’ homes). The
basis for probable cause included volumes of evidence independent of
2 The government made a good faith effort to produce a copy of
all video and audio recordings made of the interviews. Approximately
four hours of recordings was produced. Other video recordings of the
interviews may have been inadvertently deleted and subsequent efforts
to recover them have been unsuccessful. (Paetty Decl., Ex. 14.)
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the border stop, such as loan applications and bank records,
surveillance, and trash pulls. (See, e.g., Id. Ex. 11 (20-mj-5282),
Ex. 12 (20-mj-5484).)
D.
Indictment and First Superseding Indictment
On November 17, 2020, a grand jury indicted the defendants and
two others with, among other charges, conspiracy, bank fraud, and
wire fraud, based on 35 fraudulent loan applications seeking over
$5.6 million in COVID-19 relief funds. (ECF 32.) On March 9, 2021,
a grand jury returned a superseding indictment that significantly
expanded the charges. In addition to naming four new defendants, the
superseding indictment charges the original defendants with
conspiracy to commit money laundering and aggravated identity theft.
It also charges defendant Ayvazyan with new crimes he committed while
on pretrial release. As alleged, the scheme involves at least 151
fraudulent loan applications seeking over $21.9 million in COVID-19
relief funds.
III. ARGUMENT
A.
The Searches and Seizures at Miami International Airport
were Valid Exercises of the Government’s Border Search
Authority
Goods and property crossing international borders are not
subject to ordinary warrant requirements. Rather, the government’s
“inherent sovereign authority to protect its territorial integrity”
itself demonstrates the reasonableness of a border search. Torres v.
Commonwealth of P.R., 442 U.S. 465, 472–73 (1979). “[B]order
searches typically do not require any particularized suspicion, so
long as they are routine inspections and searches of individuals or
conveyances seeking to cross our borders.” United States v. Cano,
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934 F.3d 1002, 1012 (9th Cir. 2019). “Such searches are reasonable
simply by virtue of the fact they occur at the border.” Id.
The border search and seizures that are the subject of
defendants’ motions to suppress fell squarely within this
longstanding exception to the warrant requirement. Upon learning
through TECS that defendants would be arriving at MIA from Turks and
Caicos, FBI SA Palmerton sent CBP an email alerting customs officials
that defendants may be “transporting fake id’s” related to suspected
fraudulent loan applications involving “stolen/synthetic identities
and businesses.” (Paetty Decl., Ex. 1.) CBP thereafter conducted a
secondary inspection of defendants pursuant to its border search
authority. During the search, CBP found both physical credit cards
in fake names and digital contraband reflecting counterfeit
identification documents and credit cards on defendants’ phones.
Defendant Ayvazyan principally challenges the legitimacy of the
border search on the basis that it was “pretextual” and “conducted
under the authority and direction of the FBI, not CBP.” (ECF 130 at
15-18.) Defendant’s arguments fail as a matter of law and practice.
First, the fact that the FBI referred the matter to CBP does not
undermine the validity of the border search. Courts have
consistently rejected challenges to border searches where the customs
officers who conducted them collaborated with other law enforcement
agencies. The Ninth Circuit rejected this very argument in Cano,
explaining, “[w]e have upheld border searches of persons seeking
entry even when those searches were conducted ‘at the behest’ of DEA
agents seeking criminal evidence.” Cano, 934 F.3d at 1016 n.9; see
also United States v. Schoor, 597 F.2d 1303, 1306 (9th Cir. 1979)
(“Here there is no dispute that the search was conducted at an
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international border by customs officers legally entitled to search
persons entering the United States. That the search was made at the
request of the DEA officers does not detract from its legitimacy.”);
United States v. Levy, 803 F.3d 120, 123 (2d Cir. 2015) (“Official
interagency collaboration, even (and perhaps especially) at the
border, is to be commended, not condemned.”). Not only is such
coordination between federal law enforcement unsurprising, but it
falls squarely within CBP’s role as the gatekeeper at and protector
of the U.S. border. The border search authority is essential to the
ability of DHS and CBP to fulfill statutory responsibilities,
including to “ensure the interdiction of persons and goods illegally
entering or exiting the United States”. 6 U.S.C. §§ 202, 211.
Second, as a practical matter, TECS hits that provide a
predicate for secondary screenings at the border are common and
entirely permissible so long as the search is conducted by CBP (or
other officials with border authority) and the search focuses on the
interdiction of contraband. See, e.g., United States v. Cotterman,
709 F.3d 952 (9th Cir. 2013) (reversing suppression after CBP search
found digital contraband pursuant to a TEC hit); United States v.
Hassanshahi, 75 F. Supp. 3d 101, 117 (D.D.C. 2014) (denying
suppression after CBP found incriminating evidence based on a TECS
hit).
Defendants’ additional pretext arguments relating to terrorism
(ECF 130 at 16-17; ECF 136 at 10-11), are inapposite because, here,
the TECS hit and FBI referral expressly discussed defendants’ nexus
to fake identification documents and the need for CBP to initiate a
secondary screening to prevent such contraband from entering the
United States. Cano, 934 F.3d at 1013–14 (“the purpose of the border
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search is to interdict contraband”). This legitimate rationale for
conducting a secondary stop proved prescient: CBP found fake credit
cards and digital photographs of fake identification documents and
credit cards, all pursuant to its legitimate exercise of its border
search authority.
1.
The Seizure of Credit Cards in the Names of Iuliia
Zhadko and Viktoria Kauichko was Justified
During its search of defendant’s luggage and personal
belongings, CBP found credit cards not in defendants’ names but
rather in the names of defendants’ suspected fake aliases, “Iuliia
Zhadko” and “Viktoria Kauichko.” The search of defendants’
belongings and seizure of these items was proper under the
government’s plenary border search authority. Suspicionless border
searches have been endorsed in an array of contexts, including
searches of “(1) the contents of a traveler’s briefcase and luggage;
(2) a traveler’s ‘purse, wallet, or pockets’; (3) papers found in
containers such as pockets; and (4) pictures, films and other graphic
materials.” United States v. Arnold, 533 F.3d 1003, 1007 (9th Cir.
2008) (internal citations omitted).
Credit cards, which are “access devices” under 18 U.S.C.
§ 1029(e)(1), in the names of fake identities constitute contraband
subject to seizure under the border search exception. Indeed, there
can be no legitimate purpose for the possession, use, or transfer of
such counterfeit access devices.3 See generally 18 U.S.C. § 1029(a).
Contrary to defendant Ayvazyan’s contentions regarding the purpose of
3 18 U.S.C. § 1029(e)(2) defines “counterfeit access device” to
mean “any access device that is counterfeit, fictitious, altered, or
forged, or an identifiable component of an access device or a
counterfeit access device.”
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the border search (ECF 130 at 17), CBP had a legitimate basis in
seizing these counterfeit access devices as contraband in furtherance
of “enforce[ing] importation laws, and not for general law
enforcement purposes.” Cano, 934 F.3d at 1013 (internal quotations
omitted). Thus, defendants’ challenge to the seizure of these
physical contraband items should be rejected.
2.
The Manual Search of Defendants’ Digital Devices and
Seizure of Digital Contraband was Justified
During the secondary screening, CBP agents also conducted a
routine, manual search of defendants’ digital devices that resulted
in the lawful seizure of digital contraband, including photographs of
counterfeit access devices and identification documents.4
In Cano, the Ninth Circuit held that “[m]annual searches of a
cell phone at the border can be conducted without any suspicion
whatsoever.” Cano, 934 F.3d at 1019. The court further explained
that, in conducting a manual suspicionless search or a forensic
search supported by reasonable suspicion, “border officials are
limited to searching for contraband only.”5 Id. The court posited
that the “best example” of “digital contraband” is child pornography,
but it did not limit the definition to this specific category of
contraband. Id. at 1014.
4 These items included a photograph of a fake driver’s license
in the name of “Iuliia Zhadko” with an address matching defendants’
actual home address and featured a photograph of a man resembling
defendant Ayvazyan, as well as numerous other photographs of driver’s
licenses and credit cards in the names of various individuals. (See
Paetty Decl., Exs. 5, 6,_8.)
5 CBP’s search of defendants’ digital devices here was a manual,
not a forensic, search. In any event, based on the initial referral
email from FBI, CBP had, at a minimum, reasonable suspicion to
conduct a forensic search of defendants’ phones for contraband at the
time of the search.
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The digital photographs of counterfeit access devices,
identification documents, and means of identification found during
CBP’s manual search here constitute another such form of digital
contraband. Indeed, an item is contraband per se “if its possession,
without more, constitutes a crime; or in other words, if there is no
legal purpose to which the object could be put.” United States v.
Harrell, 530 F.3d 1051, 1057 (9th Cir. 2008). For example, in United
States v. Bolar, the Ninth Circuit held that photographic negatives
of Federal Reserve Notes are contraband per se because “there is no
legal purpose to which those negatives could be put.” 569 F.2d 1071,
1072 (9th Cir. 1978).6
The photographs of counterfeit credit cards and identification
documents on defendants’ phones here pose the same core concerns
recognized in Cano with respect to the illegal possession, use, and
transfer of digital contraband, such as child pornography. “The
contents may be digital when they are on the phone, but the
physicality of the phone itself and the possibility that the phone’s
contents can be printed or shared electronically gives border
officials sufficient reason to inspect it at the border.” Id. at
1013–14. Indeed, fake drivers’ licenses and counterfeit credit
cards, and the information contained on their face, are illicit
commodities that are bought, sold, and transferred among fraudsters
to execute their criminal schemes. As alleged in the first
6 Notably, while citing Bolar, a court in this district ruled
that fake California drivers’ licenses constituted contraband. See
Santos-Pineda v. Axel, No. CV 10-6285 MMM, 2011 WL 13103995, at *7
(C.D. Cal. July 26, 2011), aff'd, 621 F. App'x 407 (9th Cir. 2015)
(citing Sash v. United States, No. 09 Civ. 450, 2009 WL 3007379, *3-4
(S.D.N.Y. Sept. 22, 2009) (“[defendant] was convicted of unlawful
transfer of badges and ID cards . . . The badges and identifications
themselves are contraband per se”)).
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superseding indictment in this case, the fake identities and
corresponding identification documents of Iuliia Zhadko and Viktoria
Kauichko were, in fact, used by defendants in submitting fraudulent
PPP and EIDL loan applications and opening bank accounts, among other
things. The photographs of the counterfeit access devices and
identification documents, and the underlying fake means of
identification, found on defendants’ phones and seized by CBP have no
legitimate purpose and exist only to further criminal activity.
Defendant Terabelian incorrectly alleges that forensic searches
were conducted on the digital devices. (ECF 136 at 12-13.) As
reflected in CBP reports, however, a basic manual, not forensic,
search was conducted on all devices. (See Paetty Decl., Ex. 5 at 3;
Ex. 6 at 4.) Defendant Ayvazyan similarly challenges the searches of
the digital devices as being unreasonable due to the length of time
CBP possessed the devices. (ECF 130 at 19-21.) The fact that the
manual searches of defendants’ digital devices took place over
several hours is not, in and of itself, unreasonable. Electronic
devices can contain immense amounts of data and are capable of
storing contraband that could be located in unexpected places on a
phone. See, e.g., Cano, 934 F.3d at 1019 (“Criminals may hide
contraband in unexpected places, so it was reasonable for the two HSI
officers to open the phone’s call log to verify that the log
contained a list of phone numbers and not surreptitious images or
videos.”). Even if a more advanced forensic search had been
conducted (which it was not), such a search would have been supported
by reasonable suspicion based on the TECS hit and referral of
information provided by FBI to CBP.
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Defendants also contend that they did not give valid consent to
the officers to use their passcodes to access the digital devices.
(ECF 130 at 21-23; ECF 136 at 13-15.) This argument is irrelevant
because, as discussed above, CBP has the right and ability to conduct
a basic search of all digital devices for contraband regardless of
whether consent is provided. (See Paetty Decl., Ex. 4 at §§ 5.3.3,
5.3.4.) Indeed, CBP is authorized to request passcodes for any
encrypted digital devices at the border and, if passcodes are not
provided, to detain the devices for further review pending
determination of the devices admissibility. (Id. at § 5.3.1).
These facts were communicated to defendants during the secondary
inspection. They were given a copy of a CBP “Inspection of Digital
Devices” tear sheet describing the scope of CBP’s authority to review
their devices and defining defendants’ rights in that process. (Id.,
Ex. 7; Ex. 5 at 3; Ex. 6 at 4.) Defendants’ challenge to the basis
for their consent is irrelevant. CBP was authorized to manually
search the devices at the border — with or without defendants’
consent. Neither case defendants cite in support of their consent
arguments address border searches. (ECF 130 at 21 (citing United
States v. Reid, 226 F.3d 1020 (9th Cir. 2000); ECF 136 at 14 (citing
United States v. Ocheltree, 622 F.2d 992 (9th Cir. 1980)).
Moreover, the CBP tear sheet also explained to defendants that
they may be subject to inspection because “you have a name that
matches a person of interest in one of the government’s enforcement
databases; or you have been selected for a random search,” and
further advised them that “CBP officers may not be able to answer all
of your questions about an examination that is underway.” (Paetty
Decl., Ex. 7 at 2.) That CBP officers may have told defendants that
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they were randomly selected or selected to ensure they were not
affiliated with terrorists, as opposed to being the subject of a TECS
hit, does not matter. There is no requirement that the officers
disclose to defendants that the TECS hit was the actual reason for
the stop. Accordingly, CBP’s manual search of defendants’ digital
devices and seizure of digital contraband pursuant to its border
search authority was justified in this case.7
B.
The Good Faith Exception Applies to the Manual Search of
the Digital Devices in Miami Consistent With Controlling
Eleventh Circuit Precedent
As discussed above, CBP’s manual searches of defendants’ digital
devices (in addition to the physical search of their possessions)
were constitutional and comported with Ninth Circuit authority. But
even if the Court disagrees, CBP’s searches should be subject to the
good faith exception to the exclusionary rule.
Recognizing that “[e]xclusion exacts a heavy toll on both the
judicial system and society at large,” the Supreme Court has
established that the exclusionary rule does not apply “when the
police conduct a search in objectively reasonable reliance on binding
judicial precedent.” Davis v. United States, 564 U.S. 229, 237-27,
249-50 (2011). “An officer who conducts a search in reliance on
binding appellate precedent does no more than ac[t] as a reasonable
officer would and should act under the circumstances.” Id. at 241
(internal quotations omitted).
7 To the extent any of the digital information seized pursuant
to the manual searches of defendants’ digital devices constituted
evidence of criminal conduct but not digital contraband, such
evidence was independently obtained through the execution of a
subsequent warrant to search all six of defendants’ digital devices.
See infra section III.C.
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The manual search of defendants’ digital devices occurred in
Miami, Florida, and thus the relevant question is whether binding
Eleventh Circuit precedent authorized the border search of the
devices. As one district court explained,
tainted evidence obtained within [a different circuit] but
nonetheless admissible there should also be admissible here
regardless of whether this circuit has a more stringent
exclusionary device. Applying the principles that form the
foundation of the Court’s lex loci approach, the Court
finds that there is no logical basis for the conclusion
that the forum should reward or punish the Government with
either a more lenient or a more severe penalty than that
proclaimed by the courts of the jurisdiction where the
conduct occurred.
United States v. Gerena, 667 F. Supp. 911, 927 (D. Conn. 1987).
Numerous other district courts have similarly held that where, as
here, a court in one circuit is considering the propriety of law
enforcement’s actions in another circuit, the court should apply the
law of the circuit where the challenged conduct occurred, i.e., the
“lex loci” of the conduct. See, e.g., United States v. Kennedy, No.
CR 13-240, 2014 WL 6090409, at *5 (W.D. Pa. Nov. 13, 2014) (Sixth
Circuit law applied to search and seizure that occurred in Sixth
Circuit but was challenged in Third Circuit); United States v. Gates,
No. CR 08-42-P-H, 2008 WL 5382285, at *7 (D. Me. Dec. 19, 2008),
aff’d, 709 F.3d 58 (1st Cir. 2013) (Fourth Circuit law applied in
First Circuit); United States v. Barragan, 589 F. Supp. 2d 1012,
1015–16 (S.D. Ind. 2008) (Ninth Circuit law applied in Seventh
Circuit). These courts have generally reasoned that officers should
be able to rely on their understanding of the law as their circuit
has interpreted it. See generally id.
The Eleventh Circuit has not adopted Cano’s framework for
searching digital devices at the border, nor has it distinguished
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between the government’s ability to conduct a manual search for
digital contraband or evidence of criminality. However, the court
has expressly rejected the Ninth Circuit’s limited view of border
search authority as articulated in United States v. Cotterman, 709
F.3d 952 (9th 2013) – a case significantly relied on by the panel in
Cano. See United States v. Touset, 890 F.3d 1227 (11th Cir. 2018).
In Touset, the Eleventh Circuit held that customs officials did
not need to have reasonable suspicion in order to conduct a forensic
(as opposed to a manual) search of a cell phone. Id. at 1233. In so
holding, the court carefully considered the Ninth Circuit’s reasoning
in Cotterman, concluding that it was “unpersuaded” and “fail[ed] to
see how the personal nature of data stored on electronic devices
could trigger” a greater “personal indignity” than a suspicionless
search of a home at the border. Id. at 1234. Moreover, the Touset
court also found that Riley v. California, 573 U.S. 373 (2014) (also
a case Cano relies on to narrow the scope of the border search), 934
F.3d at 1011, 1020, has no application at the border. See 890 F.3d
at 1234. In sum, the Eleventh Circuit has firmly rejected
significant tenets underlying the Cano panel’s more narrow view of
the government’s border search authority of digital devices.
In conducting the manual searches of the digital devices at
issue here, the CBP officers in Miami relied upon “binding judicial
precedent” within the Eleventh Circuit and acted as “a reasonable
officer would and should act under the circumstances.” Davis, 564
U.S. at 239, 241. Thus, should the Court find that CBP’s searches of
the digital devices or seizures of digital contraband violated Ninth
Circuit border search precedent, the Court should nonetheless find
that CBP’s actions fall squarely within the good faith exception.
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See Davis, 564 U.S. at 241 (“About all that exclusion would deter in
this case is conscientious police work.”).
C.
The Government Obtained Valid Warrants to Search the
Digital Devices Seized from Defendants in Miami and to
Search Defendants’ and Co-conspirators’ Residences
Defendant Ayvazyan also summarily challenges subsequent search
warrants obtained by the government as the purported “fruit of the
poisonous tree” of the border search at issue in his motion. (ECF
130 at 24; ECF 135 at 18.) Defendant Ayvazyan ignores the extensive
investigation that preceded the border search in October 2020, as
well as the actual content of the affidavits in support of these
warrants, which were based substantially on evidence independent of
the border stop. The exclusionary rule is not appropriate under
these circumstances.
“Exclusion exacts a heavy toll on both the judicial system and
society at large. It almost always requires courts to ignore
reliable, trustworthy evidence bearing on guilt or innocence. And
its bottom-line effect, in many cases, is to suppress the truth and
set the criminal loose in the community without punishment.” Davis,
564 U.S. at 237 (internal citations omitted). Suppression thus is a
remedy of “last resort.” Id. Application of the exclusionary rule
is “particularly” inappropriate when “an officer acting with
objective good faith has obtained a search warrant from a judge or
magistrate and acted within its scope.” United States v. Leon, 468
U.S. 897, 920 (1984). “In most such cases, there is no police
illegality and thus nothing to deter.” Id. at 920-21. Once a judge
signs a warrant, “there is literally nothing more the policeman can
do in seeking to comply with the law.” Id. at 921.
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The warrants at issue here were lawfully obtained and largely
independent of information developed during the border stop. In
particular, around two weeks after the border stop, agents obtained
warrants to search seven residences linked to the scheme and to
search the original defendants charged in this case. (See Paetty
Decl., Ex. 11.)8 Shortly thereafter, the government obtained a
search warrant for the six digital devices seized in Miami.9 (See
id., Ex. 12.)
The warrants resulted in the seizure of, among other things,
additional evidence corroborating defendants’ use of their aliases,
Iuliia Zhadko and Viktoria Kauichko, to apply for fraudulent PPP and
EIDL loans. The warrants also yielded evidence connecting
defendants’ coconspirators to the scheme, such as stolen stamping
devices from notaries and clerks of court (including a stamp from the
clerk of the Bankruptcy Court for the Central District of
California). (See id., Ex. 13 at 1.)
In establishing probable cause, the affidavits in support of the
search warrants for the residences and individuals relied in
substantial part on evidence obtained during the months-long
investigation that preceded the border search in Miami. Indeed, by
the time of the border stop in October 2020, federal agents had been
investigating defendants’ fraudulent loan scheme for more than four
8 The government submitted the same central affidavit in support
of the eleven search warrant applications. We attach one application
here – an application for the search of defendants’ residence located
at 4910 Topeka Drive in Tarzana – as an exact representation of the
probable cause statement supporting the other ten applications.
9 The warrants, which remain under seal, have the following
case numbers: 20-MJ-5282, 20-MJ-5284, 20-MJ-5285, 20-MJ-5286, 20-MJ-
5288, 20-MJ-5289, and 20-MJ-5290 (for the seven residences); 20-MJ-
5292, 20-MJ-5293, 20-MJ-5294, and 20-MJ-5296 (for the four
defendants); and 20-MJ-5484 (for the six digital devices).
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months. During that time, agents had conducted numerous interviews,
pursued leads and other investigative activities, obtained
information from federal and state agencies, lenders, banks, and
other entities, and served more than 200 grand jury subpoenas. (See
Massino Decl. ¶ 4.) The statements of probable cause supporting the
search warrant applications for the residences and individuals were
based predominantly on the fruits of this independent investigation,
not the more limited information derived from the border search in
Miami. (See generally Paetty Decl., Ex. 11.) The affidavit in
support of the subsequent devices search warrant application directly
incorporated and attached the probable cause statement from these
prior search warrants, as well as the affidavits in support of the
criminal complaints filed against all four original defendants, which
also detailed the investigation preceding the border stop. (See
generally id., Ex. 12.). In short, all of the search warrant
applications were supported in substantial part by significant
evidence of probable cause obtained independent of the border stop in
Miami.
Moreover, even if the border search resulted in illegally
obtained evidence (which it did not), the isolated references to such
evidence in the search warrant affidavits do not invalidate the
entire warrants. “[T]he mere inclusion of tainted evidence in an
affidavit does not, by itself, taint the warrant or the evidence
seized pursuant to the warrant.” United States v. Vasey, 834 F.2d
782, 788 (9th Cir. 1987). “A reviewing court should excise the
tainted evidence and determine whether the remaining, untainted
evidence would provide a neutral magistrate with probable cause to
issue a warrant.” Id. This is so because a “warrant may be upheld
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even where it contains tainted and untainted facts as long as the
untainted portions contain a sufficient showing of probable cause to
render the warrant valid.” United States v. Driver, 776 F.2d 807,
812 (9th Cir. 1985). In reviewing information in support of a search
warrant, courts should do so in a “common sense and realistic
fashion.” Id. at 811.
In light of the ample evidence detailed in the warrant
applications linking defendants to the fraud scheme independent of
the Miami border stop, the subsequent search of the defendants, the
subject residences, and defendants’ digital devices pursuant to those
warrants was not unreasonable at all, much less “obviously”
unreasonable. Messerschmidt v. Millender, 565 U.S. 535, 556 (2012)
(the question under the good-faith exception is not whether the
magistrate judge “erred” in issuing a warrant, but whether “the
magistrate so obviously erred that any reasonable officer would have
recognized the error”). The warrants were obtained primarily
independent of any purported Fourth Amendment violations from the
border stop, and evidence obtained from these warrants should not be
excluded.
D.
Defendants Were Not Entitled to Miranda Warnings Prior to
Secondary Screening
Defendants also seek to suppress statements they made during
secondary screening, contending that the questioning violated their
constitutional rights because they were not given Miranda warnings.
(ECF 135 at 11-18; ECF 136 at 6-12.) Defendants’ Fifth Amendment and
Sixth Amendment challenges should be rejected as well.
As a threshold matter, the government does not dispute that
video evidence relating to portions of the interviews conducted by
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CBP officers may have been inadvertently deleted by CBP despite the
government’s good faith efforts to preserve such information.
However, to the extent it existed and was deleted, such video
evidence would be, at most, relevant only to defendants’ motions to
suppress statements made during the video recorded interviews. Such
evidence would not be relevant to the seizure of the physical
contraband from defendants’ personal belongings or CBP’s basic search
of defendants’ digital devices (which did not require consent or even
the passcodes). Defendants’ other arguments – about the alleged
denial of the right to counsel and about the alleged tactics used by
CBP during the interviews – are similarly relevant only to
defendants’ motion to suppress statements. Importantly, defendants
do not actually identify any statements that they made during these
interviews that should be suppressed. But even if they did and the
Court were to find suppression to be warranted, the proper remedy
would be to suppress those statements only.
Defendants’ allegations that the government acted in bad faith
are directly refuted by the government’s transparency in detailing
for counsel and the Court the information it learned about the
secondary stop, including about the video evidence that may have been
inadvertently deleted, and the extensive efforts undertaken by CBP to
recover such evidence. (See Paetty Decl., Ex. 14.) Defendants’
allegations of bad faith are further undermined by the fantastical
nature of their alleged motive, a purported government cover-up of
the use of policies and procedures that are public knowledge (such as
interagency coordination among federal law enforcement agencies, the
use of the TECS System in secondary inspections, and search of
digital devices at the border). Not only has the federal government
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made such information available to the general public (see, e.g.,
https://www.dhs.gov/publication/tecs-system-cbp-primary-and-
secondary-processing-tecs-national-sar-initiative), but it provides
certain information – such as about the search of digital devices at
the border – directly to travelers, like defendants, in mass-produced
handouts. (See Paetty Decl., Exs. 4, 7.)
In any event, questions at the border do not trigger Miranda
merely because they are posed during a secondary screening at the
border. United States v. Kiam, 432 F.3d 524 (3d Cir. 2006). Courts
agree that such questioning can also be viewed as non-custodial, even
if the individual is not free to leave. See, e.g., United States v.
Fernandez-Ventura, 132 F.3d 844, 846 (1st Cir. 1998); United States
v. FNU LNU, 653 F.3d 144 (2d Cir. 2011); United States v. Bengivenga,
845 F.2d 593, 599 (5th Cir. 1988) (en banc); United States v.
Galloway, 316 F.3d 624 (6th Cir. 2003); United States v. Gupta, 183
F.3d 615 (7th Cir. 1999); United States v. Moya, 74 F.3d 1117, 1120
(11th Cir. 1996).
For the reasons explained above in section III.B with respect to
digital devices, under the “lex loci” approach, the law of the
Eleventh Circuit should apply. In Moya, the Eleventh Circuit held
that because of the sovereign’s responsibility to secure its borders,
“some degree of questioning and of delay is necessary and is to be
expected at entry points into the United States.” 74 F.3d at 1120.
“Because of this expectation, questioning at the border must rise to
a distinctly accusatory level before it can be said that a reasonable
person would feel restraints on his ability to roam to the degree
associated with formal arrest.” Id. (internal quotations omitted).
Events which might be enough often to signal “custody” away from the
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border will not be enough to establish “custody” in the context of
entry into the country. Id. In sum, Miranda warnings are not
required under these circumstances even in cases where a secondary
interview is part of the border routine. Id.
But even if the Court applies Ninth Circuit law, questioning at
the border similarly is afforded more latitude. See United States v.
Guzman-Padilla, 573 F.3d 865, 883-84 (9th Cir. 2009) (noting that the
Government has more leeway to detain individuals at the border
without effecting an arrest because “special rules apply at the
border”); see also United States v. Nava, 363 F.3d 942, 946 (9th Cir.
2004) (defendant not arrested at border after being escorted in
handcuffs to security office, having pat down search conducted, and
being forced to wait in locked office during truck search).
Defendants were being interviewed to determine their
admissibility into the United States. Under 8 U.S.C. § 1225(a)(5),
CBP officers may require any applicant for admission into the United
States to give statements to assist the officers in determining
whether the applicant is admissible. In addition, the Ninth Circuit
recognizes that under 19 U.S.C. § 1582, all persons entering the
United States are subject to search and detention, including to
answer “routinely asked questions” regarding, among other things,
their travels and “any merchandise or goods” they are carrying with
them. United States v. Chavez-Martinez, 407 F.2d 535, 539 (9th Cir.
1969); see also United States v. Reyes, 631 F.2d 616, 622 (9th Cir.
1980) (“[R]outine inquiries during extended border searches
concerning ownership of the containers crossing the border do not
constitute ‘custodial interrogation’ within the meaning of
Miranda.”); United States v. Ozuna, 170 F.3d 654, 658 (6th Cir. 1999)
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(“Other courts have held consistently that the Miranda warnings need
not precede initial routine questioning by Immigration or Customs
officials because such questioning is not ‘custodial
interrogation’”).
Notably, defendants do not actually identify any statements they
made that they seek to suppress. The practical effect of defendants’
motion to suppress these unidentified statements is therefore to put
before the Court defendants’ version of events, which, according to
them, include their repeated efforts to invoke a right to counsel.
There are, however, significant reasons to question defendants’
credibility. Defendants both previously pled guilty for their joint
participation in a conspiracy to commit bank fraud that included
making false and misleading statements about the true identity of
defendant Ayvazyan’s mother. See United States v. Richard Ayvazyan,
CR 11-180-CJC. Moreover, in the declaration he submitted in support
of the instant motions, defendant Ayvazyan brazenly lies to this
Court when he misrepresents that he had the permission of Viktoria
Kauichko and Iuliia Zhadko – who are fake and synthetic identities –
to use credit cards opened in their names and omits that he also
possessed images of driver’s licenses and credit cards in the names
of several other individuals. (Ayvazyan Decl. ¶ 22.)
Even accepting defendants’ version of events, their description
of what they were asked by CBP does not rise to the level of
interrogation that would merit Miranda warnings or trigger the need
for an attorney, especially at the border. Nor do the alleged
categories of questions constitute interrogation about a particular
crime – namely, wire or bank fraud involving PPP or EIDL loan funds.
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Specifically, according to defendant Ayvazyan, at his secondary
inspection he was asked questions about “where [he] was coming from,
phone numbers, relatives’ names, children’s names, social media
accounts, employment, bank accounts, whether [he] was associated with
organized crime, and whether [he] had any prior convictions” as well
as questions about where he lived and his employment. (Ayvazyan
Decl. ¶ 17.) Ayvazyan also stated that he was asked whether he owned
the digital devices he was carrying and was asked questions about the
credit cards he was carrying in the names of Iuliia Zhadko and
Viktoria Kauichko. (Id. ¶¶ 18, 22.) According to defendant
Terabelian, she was asked questions about her background, her
husband, his work, and where she had traveled. (Terabelian Decl. ¶
16.)
The questions posed to both defendants address either background
questions that speak to their identity or questions related to the
contraband they carried and as such fall squarely within the realm of
routine customs questions required for CBP to fulfill its essential
tasks of ensuring that defendants are admissible and interdicting
contraband. See Reyes, 631 F.2d at 622. Even accepting defendants’
declarations as true, none of the questions purportedly asked by CBP
sought information about PPP or EIDL loans, which comports with the
scope of questions that SA Palmerton requested that CBP ask
defendants. (See Paetty Decl., Ex. 1.) All of these questions are
routine customs-related inquiries as reflected on the checklist
provided to CBP officers to assist in secondary screenings. (Id.,
Ex. 9.)
Thus, defendants’ own declarations belie their claim that CBP
officers asked them questions designed to incriminate them and
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ultimately undercut the notion that the questions “went to the heart”
of the PPP/EIDL loan fraud scheme. (ECF 136 at 7.) Furthermore, the
CBP Officers’ lack of knowledge of the nature of the charges under
investigation (id. at 10) further supports the inference that the
officers were not even equipped to interrogate defendants about the
loan fraud scheme. And defendant Terabelian’s lack of knowledge
about what charges she may have faced supports that CBP officers did
not ask her questions about those charges or else she would have
known what the charges were. (Id.)
Defendants’ assertions that they were subjected to an
unreasonably lengthy detention are undermined by the fact that they
were carrying numerous digital devices that, upon manual review,
revealed a trove of digital contraband. As reflected in defendant
Terabelian’s motion (ECF 136 at 10), defendants also gave
inconsistent and conflicting answers to officers’ questions and were
travelling with credit cards in other people’s names. See e.g.,
Ozuna, 170 F.3d at 658 (“incomplete and inconsistent answers . . .
necessitated repetition of the questions.”). All of these red flags
make it entirely reasonable that defendants would be detained while
officers made a determination, pursuant to their plenary authority as
gatekeepers at the border, to interdict contraband and ensure that
persons seeking admission to the United States were in fact
admissible.
IV.
CONCLUSION
For the foregoing reasons, the government respectfully requests
that this Court deny defendants’ motions to suppress.
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