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OBJECTIONS to and APPEAL from Dispositive Order [Document 92 ] of Magistrate Judge;… — USA v. Kao (Dkt. 93)

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Defendant Martin Kao's Objections to and Appeal from Dispositive Order [Document 92] of Magistrate Judge, with Exhibit 1, in CR. NO. 21-00061 LEK, in the U.S. District Court for the District of Hawaii, Document 93 in No. 1:21-cr-00061-LEK, filed March 1, 2023. Civil counsel Keith M. Kiuchi appears for the limited purposes of objecting to the order granted in favor of Movant Pacmar Technologies. The table of contents lists objections that the Magistrate Judge erroneously determined that Mr. Kao had no privacy interest in the phone, and should have denied the motion without prejudice until after the criminal case is over. The brief states that review of the objections is de novo.

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Court	U.S. District Court for the District of Hawaii
Filed	2023-03-01

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“OBJECTIONS to and APPEAL from Dispositive Order [Document 92 ] of Magistrate Judge;… — USA v. Kao (Dkt. 93).” U.S. District Court for the District of Hawaii, No. 1:21-cr-00061-LEK, Doc. 93, filed 2023-03-01. Archived at Pandemic Darlings, https://pandemicdarlings.com/court-filings/full-docket-kao-hawaii-1-21-cr-00061/2023-03-01-gov-uscourts-hid-154418-93-0-doc-93/, SHA-256 7ca7ea3e9c430a72a5470c0bad01ab0f9933ba236949696a98fdf1845b1958b8.

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86314

KEITH M. KIUCHI #2735
1001 Bishop Street, Suite 985
Honolulu, Hawaii 96813
Telephone: (808) 533-2230
Facsimile: (808) 533-4391
E-Mail: kkiuchi106@cs.com

Civil Attorneys for Defendants
MARTIN KAO appearing to for the
limited purposes of Objecting to the
Order granted in favor of Movant
Pacmar Technologies, Inc.

CHOI & ITO, Attorneys at Law
Chuck C. Choi
#6435
Allison A. Ito

#8152
Michel A. Okazaki #6524
(independent lawyer appearing
through Choi & Ito)
700 Bishop Street, Suite 1107
Honolulu, Hawaii 96813
Telephone: (808) 533-1877
Facsimile: (808) 566-6900
Email: cchoi@hibklaw.com
aito@hibklaw.com

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

UNITED STATES OF AMERICA
Plaintiff,
v.
MARTIN KAO
Defendant.
CR. NO. 21-00061 LEK

DEFENDANT MARTIN KAO’S
OBJECTIONS TO AND APPEAL
FROM DISPOSITIVE ORDER
[DOCUMENT 92] OF MAGISTRATE
JUDGE; EXHIBIT 1
PACMAR TECHNOLOGIES LLC,
Movant,
v.
MARTIN KAO,
Respondent/Objecting Party.

Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 1 of 27 PageID.535

86314
i

TABLE OF CONTENTS

I. PROCEDURAL AND FACTUAL BACKGROUND ............................................................ 1
II. OBJECTIONS ......................................................................................................................... 5
III. LEGAL STANDARD ............................................................................................................. 6
IV. DISCUSSION OF THE OBJECTIONS .................................................................................. 8
A.
THE MAGISTRATE JUDGE ERRONEOUSLY DETERMINED THAT MR. KAO DID
NOT HAVE A PRIVACY INTEREST IN THE PHONE EVEN THOUGH MR. KAO
COULD NOT TESTIFY AS TO SUCH MATTERS WITHOUT IMPLICATING HIS
FIFTH AMENDMENT RIGHT AGAINST SELF-INCRIMINATION. ........................... 8
B.
RATHER THAN CONSTRUE THE EVIDENCE AGAINST MR. KAO, THE
MAGISTRATE JUDGE SHOULD HAVE DENIED THE MOTION WITHOUT
PREJUDICE UNTIL AFTER MR. KAO’S CRIMINAL CASE IS OVER ..................... 10
C.
THE MAGISTRATE JUDGE’S CONCLUSION THAT MR. KAO HAD NO
REASONABLE EXPECTATION OF PRIVACY CANNOT BE RECONCILED WITH
EVEN THE LIMITED RECORD .................................................................................... 11
D.
THE MAGISTRATE JUDGE COMMITTED ERROR BY GIVING PACMAR
GOVERNMENT WORKPRODUCT THAT PACMAR CLEARLY INTENDS TO USE
IN ITS RECENTLY-FILED CIVIL RICO LAWSUIT.................................................... 13
E.
THE MAGISTRATE JUDGE FAILED TO PROTECT MR. KAO’S PRIVACY
INTERESTS IN SEIZED PROPERTY ............................................................................ 16
F.
THE MAGISTRATE JUDGE RULED WITHOUT KNOWING THE CONTENTS OF
THE DATA HE ORDERED RELEASED ....................................................................... 17
G.
THE MAGISTRATE JUDGE FAILED TO IMPLEMENT LESS DRASTIC
ALTERNATIVES TO A COMPLETE PRODUCTION ................................................. 19
V. CONCLUSION ..................................................................................................................... 19

Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 2 of 27 PageID.536

TABLE OF AUTHORITIES

Federal Cases
Christian v. United States, No. 1:19-cv-1058 (LMB), 2020 U.S. Dist. LEXIS
104646 (E.D. Va. June 15, 2020) .........................................................................15
Griffin v. California, 380 U.S. 609, 85 S. Ct. 1229 (1965) ....................................... 9
In re Karis, 208 B.R. 913 (Bankr. W.D. Wis. 1997) ................................................. 9
In re Scranton Hous. Auth., 487 F. Supp. 2d 530 (M.D. Pa. 2007) ........................... 7
Logan v. Robert’s Haw., No. 20-00113 LEK-WRP, 2021 U.S. Dist. LEXIS 250779
(D. Haw. Dec. 14, 2021) .......................................................................................10
Riley v. California, 573 U.S. 373, 134 S. Ct. 2473 (2014) ......................................17
United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951) ....................................16
United States v. Brown, 308 F. Supp. 3d 620 (D.R.I. 2018) ...................................15
United States v. Collins, No. 11-CR-00471-DLJ (PSG), 2012 U.S. Dist. LEXIS
35980 (N.D. Cal. Mar. 16, 2012) ........................................................................... 7
Federal Rules
CrimLR57.4 ............................................................................................................... 6
LR 74.1 ....................................................................................................................... 6
LR 74.2 ....................................................................................................................... 6
Other Secondary Sources
https://www.justice.gov/jm/jm-1-6000-doj-personnel-witnesses#1-6.100 (last
visited 2/5/23) .......................................................................................................16
https://www.justice.gov/oip/make-foia-request-doj#6 ............................................16
Justice Manual, Title 1, Section 1-6.100 .................................................................16
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 3 of 27 PageID.537

MARTIN KAO’S OBJECTIONS TO AND APPEAL FROM DISPOSITIVE
ORDER [DOCUMENT 92] OF MAGISTRATE JUDGE

Defendant Martin Kao, through civil counsel appearing for the limited
purposes of objecting to the order granted in favor of Movant Pacmar
Technologies Inc., hereby submits his OBJECTIONS TO AND APPEAL FROM
DISPOSITIVE ORDER [DOCUMENT 92] OF MAGISTRATE JUDGE.
I.
PROCEDURAL AND FACTUAL BACKGROUND1

Martin Kao is the former CEO and Manager of the Martin Defense Group,
LLC, fka Navatek LLC, nka Pacmar Technologies, LLC (the “Company”).

In 2008, he was recruited to become the Company’s CFO.

In October 2012, Mr. Kao was appointed the CEO of the Company.

In March 2019, Mr. Loui and Mr. Kao entered into an Operating Agreement
that transferred control of the Company to Mr. Kao.

After being charged by Criminal Complaint dated 9/29/20, Martin Kao was
arrested on September 30, 2020. (Mr. Kao would be charged by indictment on
May 6, 2021, commencing the above-entitled criminal action).

At the time of his arrest, his Iphone was seized.

On November 9, 2020, a civil complaint was filed against Mr. Kao by
Navatek Capital Inc., the 1% owner of MDG, on Nov. 9, 2020. See Circuit Court

1 The following is from Mr. Kao’s Memorandum In Opposition, filed as Dkt 89, at
pages 2 through 6.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 4 of 27 PageID.538

of the First Circuit, Civil No. 1CCV-20-0001511. The complaint contained
derivative and direct claims.

On March 20, 2021, Mr. Kao, through his counsel at the time, filed a motion
to dismiss or in the alternative to compel arbitration. That motion was eventually
taken off the calendar.

On April 1, 2021, the parties in the civil action entered into a: Stipulation
and Order to (1) Refer Matter to Voluntary Settlement Conference; and (2) Stay
Proceedings Pending Alternative Dispute Resolution.

The settlement conference was not successful, and the parties entered into an
agreement with Dispute Prevention and Resolution on May 26, 2021 to engage in
binding arbitration.

On May 24, 2021, two days before the parties executed the agreement with
Dispute Prevention and Resolution, Mr. Kao’s prior counsel filed a Motion to Stay
Arbitration Pending Resolution of Criminal Proceedings.

The Order Denying the Motion to Stay Arbitration Pending Resolution of
Criminal Proceedings was signed on June 6, 2021.

The arbitration proceeding started on Sept. 27, 202; with hearings held on
Sept. 28, 2021; Sept. 29, 202; Sept. 30, 2021; Oct. 1, 2021; Oct. 5, 2021; and Oct.
7, 2021. Mr. Kao did not testify at the arbitration. He asserted his rights to remain
silent under the U.S. and Hawaii Constitutions.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 5 of 27 PageID.539

After the arbitration hearing, the arbitrator entered its his Award on Nov. 23,
2021. The award was a total of $6,125,781.80.

The Final Judgment Confirming Arbitration Award filed on April 28, 2022.
A Notice of Appeal was filed on May 27, 2022.

MDG filed a fraudulent transfer action against Mr. Kao and others on May
8, 2022, relating to certain properties and a mortgage.

An indictment against Mr. Kao for alleged campaign finance violations was
filed on February 10, 2022, in federal district court in the District of Columbia.

On June 22, 2022, MDG filed a 66-page civil RICO Complaint against Mr.
Kao and others in the U.S. District Court for the District of Hawaii. See Pacmar
Technologies LLC (fka Martin Defense Group, LLC), and Navatek Holdings LLC
v. Martin Kao et al, Case 1:22-cv-00283-LEK-WRP. Pacmar recently filed a First
Amended Complaint, which expanded the pleading to 112 pages.

By letter dated 12/21/22, Pacmar, through counsel, wrote to AUSA Craig
Nolan and made the following request:
The Company … requests that the DOJ return Mr. Kao’s
Company Cellphone and/or the Cellphone Data to the Company
as soon as possible. To the extent the DOJ desires to maintain
possession of Mr. Kao’s Company Cellphone as physical
evidence in its pending Criminal Case, the DOJ’s return of the
extracted Cellphone Data through a searchable reader (i.e.,
CelleBrite) will suffice in lieu of a return of the physical
Cellphone.

Dkt. 82-9.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 6 of 27 PageID.540

Mr. Kao, through counsel, objected to the return of the cellphone or its
contents.

On January 5, 2023, another indictment was brought against Martin Kao in
CR23-0003, United States District Court for the District of Hawaii. The
indictment asserts a claim for bank fraud and forfeiture relating to 4902 Kahala
Avenue, Honolulu, Hawaii.

On January 24, 2023, Pacmar filed a motion under Fed. R. Crim. P. 41(g) for
return of the cellphone or the cellphone data.

On January 26, 2023, the U.S. filed a response, stating in part:
[T]he government does not oppose an order to return a copy of
the data extracted by the government from the cellphone seized
from and used by Martin Kao, which PacMar states in its
Motion is sufficient at this point in time. … Because Mr. Kao
objected to such production, he should have an opportunity to
respond to PacMar’s Motion.

Finally, the government notes that although Mr. Kao has
entered guilty pleas to all charges in the instant wire fraud
matter, he has not yet been sentenced, and he was recently
indicted in this District for bank fraud in CR 23-00003 LEK.
The cellphone at issue constitutes and contains evidence in both
prosecutions.

Dkt. 84 at 2. The U.S. clarified that “if such Motion is granted after Mr. Kao’s
opportunity to respond, that the Court limit the scope of the order to a production
of a copy of the data extracted by the government from the cellphone.” Id. at 3.

A transcript of the hearing will be provided when available.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 7 of 27 PageID.541

II.
OBJECTIONS

The magistrate judge did not enter findings and conclusions, and instead
entered an Order. As stated in the Magistrate Judge’s Order:

A. The Motion is GRANTED;

2. The Court adopts the arguments and authorities relied upon
by PacMar and finds that the cellular phone previously issued
by PacMar to Defendant Kao during his employment with
Pacmar, Apple iPhone 11 Pro (IMEI 353247100759018) (the
“Company Cellphone”), and all of the business and personal
data stored therein (hereinafter the “Cellphone Data”), are the
property of PacMar pursuant to PacMar’s policies which were
acknowledged by Defendant Kao and that Defendant Kao has
no5easonnable expectation of privacy with respect to the
Cellphone Data.

3. Having found that PacMar is the owner of the Company
Cellphone and Cellphone Data, the Court further finds that
PacMar has met the requirements under Rule 41(g) of the
Federal Rules of Criminal Procedure for the return of its
property and is therefore entitled to the Government’s return of
the Cellphone Data under Rule 41(g);

4. Pursuant to the representations made in the Government’s
Response, the Government shall retain the Company Cellphone,
and a copy of the entirety of the Cellphone Data shall be
returned to PacMar within thirty (30) days; and

Dkt. 92. Defendant Martin Kao objects to the foregoing, which is the entirety of
the order. Defendant Martin Kao further objects to any express or implied
findings, report and recommendation of the Magistrate Judge.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 8 of 27 PageID.542

The instant Objections are timely as they are filed within 14 days of the
February 15, 2023 Order.
III.
LEGAL STANDARD

The Local Criminal Rules for the United States District Court for the District
of Hawaii provide for District Judge review of Magistrate Judge orders on
dispositive pretrial motions as follows:
CrimLR57.4. Magistrate Judges; Dispositive Pretrial Motions.

(A)
Findings and Recommendations by the Magistrate Judge.
All dispositive motions in criminal cases shall be heard by a
district judge, unless specifically referred to a magistrate
judge pursuant to 28 U.S.C. § 636(b)(1)(B). Any party may
move for reconsideration before the magistrate judge pursuant
to CrimLR60.1. A reconsideration motion shall toll the time in
which objections from the magistrate judge’s findings and
recommendations must be filed and served.

(b) Objections to Reports and Recommendations in
Dispositive Matters.
Any party who objects to any portion of a magistrate judge’s
findings and recommendations must serve and file written
objections to such findings and recommendations within
fourteen (14) days after being served with a copy of the
recommended disposition. Briefing requirements and
deadlines are governed by CrimLR12.2.

CrimLR57.4 (Emphasis added) (1/2023).

The Civil Local Rules provide for similar procedure for objection. See LR
74.1 and 74.2.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 9 of 27 PageID.543

A Federal Rules of Criminal Procedure Rule 41(g) motion is a dispositive
motion. See e.g. United States v. Collins, No. 11-CR-00471-DLJ (PSG), 2012 U.S.
Dist. LEXIS 35980, at *21 (N.D. Cal. Mar. 16, 2012) (“The court has failed to
identify any Ninth Circuit case characterizing a Rule 41(g) motion as non-
dispositive, but must conclude that a magistrate judge’s consideration of a Rule
41(g) motion is appropriately treated as a report and recommendation on a
dispositive motion.”) (Magistrate Judge); see also In re Scranton Hous. Auth., 487
F. Supp. 2d 530, 534 (M.D. Pa. 2007) (“[M]agistrate judges do not have
jurisdiction under section 636(a) to entertain Rule 41(g) motions. However, this
amendment also evidences Congress’ intent to grant jurisdiction to magistrate
judges to hear Rule 41(g) motions. See id. As such, the Court is of the opinion that
the 1989 amendment provided magistrate judges with the authority to hear Rule
41(g) motions pursuant to subsections (b) and (c) of section 636.”).

The review of the objections in this proceeding is de novo. 28 U.S.C.
§636(b) provides in part as follows:
Within fourteen days after being served with a copy, any party
may serve and file written objections to such proposed findings
and recommendations as provided by rules of court. A judge of
the court shall make a de novo determination of those
portions of the report or specified proposed findings or
recommendations to which objection is made. A judge of the
court may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate
[magistrate judge]. The judge may also receive further
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 10 of 27 PageID.544

evidence or recommit the matter to the magistrate
[magistrate judge] with instructions.”
28 U.S.C. §636(b) (Emphasis added).
IV.
DISCUSSION OF THE OBJECTIONS

A.
THE MAGISTRATE JUDGE ERRONEOUSLY DETERMINED
THAT MR. KAO DID NOT HAVE A PRIVACY INTEREST IN
THE PHONE EVEN THOUGH MR. KAO COULD NOT
TESTIFY AS TO SUCH MATTERS WITHOUT IMPLICATING
HIS FIFTH AMENDMENT RIGHT AGAINST SELF-
INCRIMINATION.

The first argument in Mr. Kao’s opposition was the following: “Mr. Kao
should not be required to defend his position while criminal sentencing and a
criminal case are pending.” See Dkt. 89 at 7.
Mr. Kao has and will continue to invoke his privilege against
self-incrimination enshrined in the Fifth Amendment of the
United States Constitution, Article I, Section 10 of the Hawai’I
Constitution and Hawai’i Rule of Evidence 509. As the US
points out, Mr. Kao has not been sentenced in two pending
cases and a new criminal indictment was recently filed.
“Whether an answer “would furnish a link in the chain of
evidence needed to prosecute” has also been liberally
construed.” United States v. Chandler, 380 F.2d 993, 997 (2d
Cir. 1967).

Id. Mr. Kao, in the Opposition, argued that he could not describe, among other
things, his history relating to the cell phone and the handbook documents without
the risk of further incrimination. As stated in the Opposition:
In order to fully oppose the instant motion, Mr. Kao would have
testify as to the following topic: his history relating to cellphone
use at the company; his recollection regarding the documents
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 11 of 27 PageID.545

produced by Pacmar; his history relating to cell phone and the
phone number; the reasons for any text message; his personal
and business contacts; and other matters that may implicate the
privilege against self-incrimination.

Id. at 8. Indeed, while the U.S. has the contents of the phone, the U.S. does not
necessarily know how Mr. Kao got the phone, whether he had any other phones,
the extent of Mr. Kao’s control over MDG and its policies, Mr. Kao’s state of mind
when he was using the phone, and other matters relevant to the issue of whether
Mr. Kao had a reasonable expectation of privacy.

The Magistrate Judge effectively penalized Mr. Kao for invoking the
privilege against self-incrimination. There should be no penalty or cost to a
criminal defendant for invoking the privilege against self-incrimination in a
criminal action. See Griffin v. California, 380 U.S. 609, 615, 85 S. Ct. 1229, 1233
(1965).

The phone had been seized around 2.5 years ago, in September 2020. Other
than an alleged need to review the data because of its business, there was no
identifiable urgency. The data was in safe hands: the U.S. Attorneys’ office. The
Magistrate Judge failed to give adequate weight to Mr. Kao’s constitutional rights.

Even if Pacmar established ownership, this would only be evidence of legal
title. There is no dispute that the phone was taken from Mr. Kao and was in his
possession. The old axiom that “possession is 9/10’s of the law” is relevant here.
See e.g. In re Karis, 208 B.R. 913, 917 n.2 (Bankr. W.D. Wis. 1997). Mr. Kao was
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 12 of 27 PageID.546

the CEO of the company and (except for a 1% stake) the owner of MDG. Clearly,
this position of ownership and control is relevant to whether he had an expectation
of privacy. Who at the company at the time Mr. Kao was CEO and owner would
have asked Mr. Kao for personal information on his phone? Had Mr. Kao been
able to testify, he could have described in detail his state of mind and expectation
of privacy with respect to the phone he possessed as the owner and manager of the
MDG.
B.
RATHER THAN CONSTRUE THE EVIDENCE AGAINST MR.
KAO, THE MAGISTRATE JUDGE SHOULD HAVE DENIED
THE MOTION WITHOUT PREJUDICE UNTIL AFTER MR.
KAO’S CRIMINAL CASE IS OVER.

While the proceeding has elements of a non-criminal proceeding, it arose in
a criminal proceeding; indeed, in the very case where Mr. Kao will be sentenced.

Typically, where a civil and a criminal proceeding involve the same facts,
the civil proceeding is stayed. See e.g., Logan v. Robert’s Haw., No. 20-00113
LEK-WRP, 2021 U.S. Dist. LEXIS 250779, at *5 (D. Haw. Dec. 14, 2021)
(“There is no dispute that Meniti has been indicted and that this civil matter
involves the same facts as the pending criminal matter; thus, Meniti’s Fifth
Amendment rights could be threated if this case proceeds.”) (citation omitted) (stay
granted).
C.
THE MAGISTRATE JUDGE’S CONCLUSION THAT MR.
KAO HAD NO REASONABLE EXPECTATION OF PRIVACY
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 13 of 27 PageID.547

CANNOT BE RECONCILED WITH EVEN THE LIMITED
RECORD

Pacmar’s arguments were based on the patchwork of ambiguous employee
handbook pages and other so-called policy excerpts. Even without the benefit of
Mr. Kao’s testimony, none of these established the right Pacmar was claiming.

None of the documents stated that Pacmar could access the phone’s data.
The so-called evidence from the Handbook is ambiguous at best. The Handbook
provides:
6. If an employee is issued a company cell phone, this may not
be used for personal phone calls unless authorized by the
Company prior to usage. All rules from this policy applies to
company issued cell phones.

See Dkt. 82-4 at C-22. Here, the Company did authorize personal calls.
Characterizing Mr. Kao as an employee when he controlled the Company is also
misleading.

Furthermore, “[t]he purpose of this policy is to promote a safe and
productive work environment and increase public safety.” The policy, which is
contained on page C-22, does not state that Cellphone data is company property.
Instead, consistent with the purpose of the policy, it is focused on avoiding
excessive use, prohibiting use while driving, and prohibiting unauthorized use or
illegal activity.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 14 of 27 PageID.548

The Handbook states: “All personnel records, including an employee’s
personnel file, are the property of the company and are confidential.” See Dkt. 82-
4 at A-9. A cell phone is not a personnel record.

The Handbook further states:
Inspections. Desks, telephones and computers are company
property. The Company has the right to enter or inspect work
area including, but not limited to, desks, lockers, computers and
computer storage disks, with or without notice.
Dkt. 82-4 at C-13. This applies by its terms to work areas. Furthermore, telephone
is reasonably understood to mean the company’s land-based phone that would be
located on a desk. Cellular Phones are treated differently in the Handbook. See C-
22.

The only signed acknowledgement by Mr. Kao of a Handbook is an undated
acknowledgement for a Navatek Lifting Bodies Technologies, LLC, handbook.
See Dkt. 82-5. It is not attached to any handbook. Nothing in the
acknowledgement makes it clear that the handbook is the one produced separately
as Dkt. 82-4.

The dates are also inconsistent. The acknowledgement is on a form that
states “Last revision: 10/01/2008[.]” See Dkt. 82-5 at 2. However, the Handbook
is comprised of sections that were revised after 2008. The handbook attached as
Dkt. 82-4 states “Last revision: 1/2010” after its table of contents. See 82-4 at 4.
Sections A-1 to A-11 states “Last revision: 2/2009[.]” See Dkt. 82-4. Sections B-1
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 15 of 27 PageID.549

to B-8 states “Last revision: 1/2010[.]” See Dkt. 82-4. Sections C-1 to C-25 states
“Last revision: 1/2010[.]” See Dkt. 82-4. Sections D-1 to D-25 states “Last
revision: 1/2010[.]” See Dkt. 82-4.

The alleged right to “monitor equipment, systems, and network traffic” is
not a transfer of privacy rights as to everything that may be on the phone, such as
photographs.

The Motion was significant in what it did not include. There is no
agreement between Mr. Kao and the Company regarding the receipt of the subject
cell phone, and any special terms and conditions. There is no document to Mr.
Kao stating that his use of the subject cell phone is limited to business use.

This mosaic of ambiguous documents cannot authorize Pacmar to obtain Mr.
Kao’s confidential phone records.
D.
THE MAGISTRATE JUDGE COMMITTED ERROR BY
GIVING PACMAR GOVERNMENT WORKPRODUCT THAT
PACMAR CLEARLY INTENDS TO USE IN ITS RECENTLY-
FILED CIVIL RICO LAWSUIT

The Civil RICO case is currently pending, although the pleadings have not
yet been closed.

Pacmar’s request appears to be an opportunistic quest for unfettered and
broad discovery it would never be able to get under civil discovery rules.
PACMAR’s request for data is more like a request for the DOJ’s investigative
work-product for a criminal matter that is not closed. Given the new indictment
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 16 of 27 PageID.550

and the refusal to turn over the phone, Mr. Kao questions the propriety of giving a
third-party documents that are apparently still part of a continuing investigation
and/or criminal action.

Indeed, Mr. Nolan stated during the hearing that the data was obtained using
Cellebrite, a DOJ forensic tool. Cellebrite data is commonly used in relation to
criminal prosecutions:
Some of this evidence was presented in the form of Cellebrite
Extraction Reports, which are forensic analyses of data
extracted from mobile phones. In short, a Cellebrite Extraction
Report lists all call logs, contacts, text messages, and data files
on a mobile phone at the time of the extraction, which is
conducted using Cellebrite technology. Id. During the trial, the
government presented Cellebrite Extraction Reports for three
mobile phones[.]

Christian v. United States, No. 1:19-cv-1058 (LMB), 2020 U.S. Dist. LEXIS
104646, at *5-6 (E.D. Va. June 15, 2020) (citation omitted). See also United States
v. Brown, 308 F. Supp. 3d 620, 626 (D.R.I. 2018) (“ The government”points out
that this new Cellebrite report captured much more than the previous report,
including extensive data on Mr. Brown’s location, cell tower locations, text
messages, Facebook conversations, and web browsing history. Id. at 3-5.”).

Pacmar is not entitled to a Cellebrite or similar report.

If this were a FOIA request, the following from the U.S. D.O.J. guidelines
would apply:
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 17 of 27 PageID.551

If you request records relating to another person, and disclosure
of the records could invade that person’s privacy, they
ordinarily will not be disclosed to you. For example, if you seek
information that would show that someone else (including your
spouse or another member of your immediate family) has ever
been the subject of a criminal investigation or was even
mentioned in a criminal file and you do not provide the
subject’s consent or proof of their death, in almost all cases
DOJ will respond by stating that it will “neither confirm nor
deny” the existence of responsive law enforcement records.
Law enforcement information about a living person is released
without that person’s consent only when no personal privacy
interest would be invaded by disclosing the information, such
as when the information is already public or required to be
made public, or in cases where the individual’s privacy interest
is outweighed by a strong public interest in dIsclosure. You
may receive greater access by submitting either a notarized
authorization signed by that individual or a declaration made in
compliance with the requirements set forth in 28 U.S.C. § 1746
by that individual authorizing disclosure of the records to you,
or by submitting proof that the individual is deceased. Each
component can require you to supply additional information if
necessary to verify that a particular individual has consented to
disclosure.

https://www.justice.gov/oip/make-foia-request-doj#6.

As disguised discovery for Pacmar’s civil RICO claim, there is also the issue
of whether such documents would be subject to the policies implementing United
States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951) if a proper demand were made.
See e.g., Justice Manual, Title 1, Section 1-6.100.2 It is not even clear that Mr.

2 “Subpart B of Part 16 of Title 28, Code of Federal Regulations, sometimes
referred to as the Department’s Touhy regulations, named after United States ex
rel. Touhy v. Ragen, 340 U.S. 462 (1951), provide that no present or former
employee of the Department of Justice may testify or produce Departmental
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 18 of 27 PageID.552

Nolan would be the official who would have authority to respond to a Touhy
request.

Pacmar’s request appears to be a misguided attempt to conduct a wide-net
search for information that may be relevant to its recently-filed Civil RICO claim.

If such a request were made in a civil case, Mr. Kao would at least be
afforded the right to seek a protective order to limit the production of irrelevant
and personal information.
E.
THE MAGISTRATE JUDGE FAILED TO PROTECT MR.
KAO’S PRIVACY INTERESTS IN SEIZED PROPERTY

The Magistrate Judge also failed to give adequate weight to Mr. Kao’s
constitutional rights when he failed to require the U.S. to segregate the personal
information that the U.S. disclosed at the hearing was on the phone. The
Magistrate Judge was swayed by alleged burden it would place on the U.S.

Mr. Kao’s right to privacy should not have been so readily dismissed.
Cellphone data is typically obtained only through a search warrant. A search
warrant is usually required because cellphones are known to contain broad,
personal information:
Modern cell phones are not just another technological
convenience. With all they contain and all they may reveal, they

records in response to subpoenas or demands of courts or other authorities issued
in any state or federal proceeding without obtaining prior approval by an
appropriate Department official.” Source: https://www.justice.gov/jm/jm-1-6000-
doj-personnel-witnesses#1-6.100 (last visited 2/5/23).
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 19 of 27 PageID.553

hold for many Americans “the privacies of life,” id., at 630, 6 S.
Ct. 524, 29 L. Ed. 746. The fact that technology now allows an
individual to carry such information in his hand does not make
the information any less worthy of the protection for which the
Founders fought. [12] Our answer to the question of what
police must do before searching a cell phone seized incident to
an arrest is accordingly simple—get a warrant.

Riley v. California, 573 U.S. 373, 403, 134 S. Ct. 2473, 2494-95 (2014).

There is no evidence that Mr. Kao did not have a reasonable expectation of
privacy regarding the phone with respect to his personal data, such as personal
photographs, medical and family information, etc.
F.
THE MAGISTRATE JUDGE RULED WITHOUT KNOWING
THE CONTENTS OF THE DATA HE ORDERED RELEASED

With respect to the data on the phone, PACMAR asked for “call logs, voice
message data, text messages, e-mails, and other forms of messaging; still and live
photographs and video; audio files; storing dates, appointments, and other
information on personal calendars, among other data[.]” See Dkt. 89 at 8. During
the hearing, AUSA Nolan disclosed that the data contains certain files that are
clearly personal in nature.

Mr. Kao’s position was that he should be informed of the files involved, and
clearly personal data should be removed.
At a minimum, before any decision adverse to Mr. Kao is
made, a copy of the “data” that the US proposes to produce
should be inspected by Mr. Kao and his counsel. Any data that
is clearly personal, such as personal contacts, information
regarding his family, health information, personal text
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 20 of 27 PageID.554

messages, personal photographs, personal search history,
among others, should be excluded.

To the extent there is data that could be claimed as company-
related, a list of these files can be produced and Pacmar can
assert a particularized basis for obtaining this information.

Dkt. 89 at 9.

The Magistrate Judge erred by ordering production of all the data, without
even requiring a basic inventory of the files. When AUSA Nolan confirmed
there were personal files, further inquiry was necessary. Under the Magistrate
Judge’s order, if there are photographs of Mr. Kao’s wife and minor children they
will be produced. If there are files relating to medical care for Mr. Kao or his
family, they will be released as well.

The Magistrate Judge’s only basis for this sweeping order is his finding that
Mr. Kao had no reasonable expectation of privacy as to any of the data. Ironically,
he made this conclusion without knowing the types of personal files that were on
the phone. Clearly, the types of files someone has on a phone may indicate
whether that person in fact had an expectation of privacy.

The Magistrate Judge could not have concluded that Mr. Kao had no
reasonable expectation of privacy based on the record. This was not even an
evidentiary hearing, and it would not be fair to have an evidentiary hearing until
Mr. Kao could testify without fear of further criminal (or sentencing) jeopardy.
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 21 of 27 PageID.555

G.
THE MAGISTRATE JUDGE FAILED TO IMPLEMENT LESS
DRASTIC ALTERNATIVES TO A COMPLETE
PRODUCTION

Once it was disclosed by the Government that personal files were on the
phone, the Magistrate Judge should have, at the least, explored less drastic options
to producing everything. The Magistrate appeared reluctant to require segregation
of personal files after AUSA Nolan stated it would be burdensome to do so.

A burden on the Government is not a reason to produce personal
information. PACMAR is the party that is asking for this information. At the
very least, a special master should be appointed at Pacmar’s cost to review
and segregate the data.
V.
CONCLUSION

The District Judge has the authority to review the Magistrate Judge’s order
de novo. Mr. Kao requests the following relief:
1. The Order should be vacated and/or rejected.
2. Alternatively, the Order should be modified in order to protect Mr. Kao’s
personal data. Pacmar should not be entitled to the data unless it pays to
have a special master review the data and segregate the personal data from
business data.
//
//
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 22 of 27 PageID.556

DATED: HONOLULU, HAWAII, MARCH 1, 2023.

Chuck C. Choi

KEITH KIUCHI
CHUCK C. CHOI
ALLISON A. ITO
MICHEL A. OKAZAKI

Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 23 of 27 PageID.557

EXHIBIT 1
Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 24 of 27 PageID.558

1
KOBAYASHI SUGITA & GODA, LLP
DAVID M. LOUIE

2162
JESSE W. SCHIEL

7995
First Hawaiian Center
999 Bishop Street, Suite 2600
Honolulu, Hawaii 96813
Telephone: (808) 535-5700
Facsimile: (808) 535-5799
E-mail:
dml@ksglaw.com;
jws@ksglaw.com

Attorneys for Movant
PACMAR TECHNOLOGIES LLC f/k/a
MARTIN DEFENSE GROUP, LLC f/k/a
NAVATEK LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAII

UNITED STATES OF AMERICA,

Plaintiff,

vs.

MARTIN KAO,

Defendant.
CR. NO. 21-00061 LEK

ORDER GRANTING MOTION FOR
RETURN OF PROPERTY
PURSUANT TO RULE 41(g) OF THE
FEDERAL RULES OF CRIMINAL
PROCEDURE

ORDER GRANTING MOTION FOR RETURN OF PROPERTY PURSUANT TO
RULE 41(g) OF THE FEDERAL RULES OF CRIMINAL PROCEDURE

PACMAR TECHNOLOGIES LLC f/k/a MARTIN DEFENSE GROUP, LLC
f/k/a NAVATEK LLC’S (“PacMar” or the “Company”) MOTION FOR RETURN
OF PROPERTY PURSUANT TO RULE 41(g) OF THE FEDERAL RULES OF
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Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 25 of 27 PageID.559

2
CRIMINAL PROCEDURE (the “Motion”) came on for hearing on February 14,
2023 at 9:30 a.m. before the Honorable Rom Trader. Jesse W. Schiel appeared for
Movant PacMar, Craig S. Nolan appeared for Plaintiff UNITED STATES (the
“Government”), and Victor J. Bakke and Michael Okazaki appeared for Defendant
MARTIN KAO (“Defendant Kao”).
Having considered the Motion, the Memorandum in Opposition filed by
Defendant Kao [Dkt. No. 89], the Government’s Response to the Motion [Dkt. No.
84, hereinafter the “Government’s Response”], PacMar’s Reply in Support of the
Motion [Dkt. No. 90], the arguments of counsel at the hearing on this matter, the
records and files herein, and for the reasons set forth on the record during the hearing,
the COURT hereby FINDS AND ORDERS as follows:
1.
The Motion is GRANTED;
2.
The Court adopts the arguments and authorities relied upon by PacMar
and finds that the cellular phone previously issued by PacMar to Defendant Kao
during his
employment with
Pacmar,
Apple
iPhone
11
Pro
(IMEI
353247100759018) (the “Company Cellphone”), and all of the business and
personal data stored therein (hereinafter the “Cellphone Data”), are the property of
PacMar pursuant to PacMar’s policies which were acknowledged by Defendant Kao
and that Defendant Kao has no reasonable expectation of privacy with respect to the
Cellphone Data.
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3
3.
Having found that PacMar is the owner of the Company Cellphone and
Cellphone Data, the Court further finds that PacMar has met the requirements under
Rule 41(g) of the Federal Rules of Criminal Procedure for the return of its property
and is therefore entitled to the Government’s return of the Cellphone Data under
Rule 41(g);
4.
Pursuant to the representations made in the Government’s Response,
the Government shall retain the Company Cellphone, and a copy of the entirety of
the Cellphone Data shall be returned to PacMar within thirty (30) days; and
5.
Should Defendant Kao file a timely objection to this order, the Court
will stay the execution of this order pending the District Court’s disposition of the
objection.
DATED: Honolulu, Hawai‘i, February 15, 2023.

CR. NO. 21-00061 LEK; United States of America vs. Martin Kao; ORDER
GRANTING MOTION FOR RETURN OF PROPERTY PURSUANT TO RULE
41(g) OF THE FEDERAL RULES OF CRIMINAL PROCEDURE
Rom A. Trader
United States Magistrate Judge
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Case 1:21-cr-00061-LEK Document 93 Filed 03/01/23 Page 27 of 27 PageID.561

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