ORDER DENYING DEFENDANT/INTERESTED PARTY MARTIN KAO'S OBJECTIONS TO AND APPEAL FROM DISPOSITIVE ORDER… (Dkt. 101)

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U.S. District Court for the District of Hawaii · No. 1:21-cr-00061-LEK · Doc. 101 · 2023-04-14 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
 
DISTRICT OF HAWAII 
  
UNITED STATES OF AMERICA, 
 
Plaintiff,  
 
 
vs.  
 
MARTIN KAO, 
 
Defendant. 
CR. NO. 21-00061 LEK 
 
 
 
 
 
ORDER DENYING DEFENDANT/INTERESTED PARTY MARTIN 
KAO’S OBJECTIONS TO AND APPEAL FROM DISPOSITIVE 
ORDER [DOCUMENT 92] OF MAGISTRATE JUDGE 
 
 
 
Before the Court is Defendant/Interested Party Martin 
Kao’s (“Kao”) Objections to and Appeal from Dispositive Order 
[Document 92] of Magistrate Judge (“Appeal”), filed on March 1, 
2023.  [Dkt. no. 93.]  On March 23, 2023, Movant PacMar 
Technologies LLC formerly known as Martin Defense Group, LLC 
formerly known as Navatek LLC (“PacMar”) filed its Response to 
Objections to and Appeal from Dispositive Order [Document 92] of 
Magistrate Judge (“PacMar Response”).  [Dkt. no. 95.]  Also on 
March 23, 2023, Plaintiff United States of America (“the 
Government”) filed its Response to Defendant Martin Kao’s Appeal 
(ECF No. 93) (“Government Response”).  [Dkt. no. 96.]  Kao filed 
his Reply to “PacMar Technologies LLC’s Response to Objections 
to and Appeal from Dispositive Order [Document 92] of Magistrate 
Judge” [Document 95] (“Reply”).  [Dkt. no. 98.]  This matter 
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came on for hearing on April 13, 2023.  See Minutes, filed 
4/13/23 (dkt. no. 100).  Kao’s Appeal is hereby denied for the 
reasons set forth below. 
BACKGROUND 
 
 
Kao was indicted on May 6, 2021 in the U.S. District 
Court for the District of Hawaii.  [Indictment (“2021 
Indictment”), filed 5/6/21 (dkt. no. 31).]  Kao’s cellular 
telephone was seized at the time of his arrest for the charges 
in the 2021 Indictment.  See Appeal at 1.  Kao “is the former 
CEO and Manager of the Martin Defense Group, LLC, fka Navatek 
LLC, nka Pacmar Technologies, LLC . . . .”  [Id.]  Kao was 
indicted in the U.S. District Court for the District of Columbia 
on February 10, 2022 “for alleged campaign finance violations” 
(“2022 Indictment”); [id. at 3;] and was indicted on January 5, 
2023 in the U.S. District Court for the District of Hawaii for 
alleged “bank fraud and forfeiture relating to” real property 
located in Honolulu, Hawaii (“2023 Indictment”), [id. at 4].  On 
September 7, 2022, Kao pleaded guilty to Counts 1 through and 
including 8 of the 2021 Indictment before a magistrate judge.  
See generally Minutes - EP: Video-Teleconference (VTC) on Motion 
for Withdrawal of Not Guilty Plea and to Plead Anew, filed 
9/7/22 (dkt. no. 76).  Kao’s pleas of guilty were accepted by 
this Court and he was adjudicated guilty of Counts 1 through 8 
on September 22, 2022.  See Acceptance of Plea of Guilty, 
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Adjudication of Guilt and Notice of Sentencing, filed 9/22/22 
(dkt. no. 79).  Sentencing on Counts 1 through 8 is currently 
schedule for November 7, 2023.  See EO, filed 2/6/23 (dkt. 
no. 88). 
 
 
On January 24, 2023, PacMar filed its Motion for 
Return of Property Pursuant to Rule 41(g) of the Federal Rules 
of Criminal Procedure (“PacMar Motion”).  [Dkt. no. 82.]  On 
February 15, 2023, the magistrate judge entered the Order 
Granting Motion for Return of Property Pursuant to Rule 41(g) of 
the Federal Rules of Criminal Procedure (“2/15 Order”).  [Dkt. 
no. 92].  In the Appeal, Kao objects to the 2/15 Order on 
numerous grounds: that the magistrate judge erred in entering an 
order; that PacMar’s Motion was a dispositive pretrial motion 
and thus the magistrate judge erred by ruling on it without a 
referral and/or issuing his findings and recommendations 
(instead of an order); that the magistrate judge erred as a 
matter of law in determining that Kao did not have a privacy 
interest in the cellular telephone and the contents of its data; 
that Kao is being penalized for invoking his right against self-
incrimination; that the magistrate judge erred as a matter of 
law by refusing to stay the request for return of property until 
Kao’s criminal case is over; that PacMar’s employment handbook 
does not give PacMar an ownership interest in the cellular 
telephone’s data; that the magistrate judge erred by giving 
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PacMar the Government’s work product, namely the evidence 
contained in the Cellebrite Extraction Reports;1 that the 
magistrate judge failed to protect Kao’s right to privacy; that 
the magistrate judge erred by ruling without first reviewing the 
contents of the data released for removal of personal 
information such as health information and personal search 
history; and the magistrate erred by failing to implement less 
drastic alternatives to a complete production, including 
appointing a special master. 
STANDARD 
 
 
Under 28 U.S.C. § 636(b)(1)(A): 
a judge may designate a magistrate judge to hear 
and determine any pretrial matter pending before 
the court, except a motion for injunctive relief, 
for judgment on the pleadings, for summary 
judgment, to dismiss or quash an indictment or 
information made by the defendant, to suppress 
evidence in a criminal case, to dismiss or to 
permit maintenance of a class action, to dismiss 
for failure to state a claim upon which relief 
can be granted, and to involuntarily dismiss an 
action.  A judge of the court may reconsider any 
pretrial matter under this subparagraph (A) where 
it has been shown that the magistrate judge’s 
order is clearly erroneous or contrary to law. 
 
(emphasis added).  Because the Appeal concerns a motion to 
return property and not, for example, a motion to suppress, the 
clearly erroneous standard applies.  “Applying this standard, ‘a 
 
 
1 Cellebrite is a Department of Justice forensic tool, which 
is used to extract data and such data is sometimes used in 
relation to criminal prosecutions.  See Appeal at 14.   
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reviewing court must ask whether, on the entire evidence, it is 
left with the definite and firm conviction that a mistake has 
been committed.’”  In re Optical Disk Drive Antitrust 
Litigation, 801 F.3d 1072, 1076 (9th Cir. 2015) (some internal 
quotation marks omitted) (quoting Easley v. Cromartie, 532 U.S. 
234, 242, 121 S. Ct. 1452, 149 L. Ed. 2d 430 (2001)).   
DISCUSSION 
 
 
Fed. R. Crim. P. 41(g) governs motions to return 
property in a criminal matter, which states: 
A person aggrieved by an unlawful search and 
seizure of property or by the deprivation of 
property may move for the property’s return.  The 
motion must be filed in the district where the 
property was seized.  The court must receive 
evidence on any factual issue necessary to decide 
the motion.  If it grants the motion, the court 
must return the property to the movant, but may 
impose reasonable conditions to protect access to 
the property and its use in later proceedings. 
 
 
 
The proof required to be demonstrated by a movant who 
seeks return of property turns upon when the motion is filed: 
 
“A person aggrieved . . . by the deprivation 
of property may move for the property’s return.”  
Fed. R. Crim. P. 41(g).  The burden of proof on a 
Rule 41(g) motion depends on when the defendant 
files the motion.  “When a motion for return of 
property is made before an indictment is filed 
(but a criminal investigation is pending), the 
movant bears the burden of proving both that the 
[property’s] seizure was illegal and that he or 
she is entitled to lawful possession of the 
property.”  United States v. Martinson, 809 F.2d 
1364, 1369 (9th Cir. 1987) (citations omitted).  
But that burden of proof changes when “the 
property in question is no longer needed for 
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evidentiary purposes, either because trial is 
complete, the defendant has pleaded guilty, or 
. . . the government has abandoned its 
investigation.”  Id.  Then, the burden of proof 
shifts and the defendant “is presumed to have a 
right to [the property’s] return, and the 
government has the burden of demonstrating that 
it has a legitimate reason to retain the 
property.”  Id.; see also United States v. 
Kriesel, 720 F.3d 1137, 1144 (9th Cir. 2013) 
(explaining that a “defendant’s Rule 41(g) motion 
should presumptively be granted if the government 
no longer needs the property for evidence.” 
(internal quotation marks and citation omitted)). 
 
 
The government can rebut the presumption 
that property ought to be returned by proving a 
“legitimate reason” for retaining the property 
that is “reasonable[] under all of the 
circumstances.”  Kriesel, 720 F.3d at 1145; see 
also United States v. Kaczynski, 416 F.3d 971, 
974 (9th Cir. 2005) (“[T]he government has the 
burden of showing that it has a legitimate reason 
to retain the property.” (quotation marks 
omitted)); Ramsden v. United States, 2 F.3d 322, 
326 (9th Cir. 1993) (explaining that 
“reasonableness under all of the circumstances 
must be the test when a person seeks to obtain 
the return of property.” (internal quotation 
marks and citation omitted)).  The Advisory 
Committee’s Note to Rule 41, to which we give 
“weight in interpreting the Federal Rules of 
Criminal Procedure,” United States v. Bainbridge, 
746 F.3d 943, 947 (9th Cir. 2014), confirms the 
“reasonableness” standard applies to the return 
of computer files on electronic storage devices, 
see Fed. R. Crim. P. 41, Advisory Committee’s 
Note to 2009 Amendment (“Rule 41(g) . . . 
provides a process for the ‘person aggrieved’ to 
seek an order from the court for a return of the 
property, including storage media or 
electronically stored information, under 
reasonable circumstances.”).  The simplest way 
for the government to carry its burden is to 
prove “the property . . . is contraband or 
subject to forfeiture.”  Martinson, 809 F.2d at 
1369; see also United States v. Fitzen, 80 F.3d 
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387, 389 (9th Cir. 1996) (“It is well-settled 
that the federal government may defeat a 
Rule [41(g)] motion by demonstrating that the 
property is subject to federal forfeiture.”).  To 
that end, district courts “must receive evidence 
on any factual issue necessary to decide the 
motion.”  Fed. R. Crim. P. 41(g).  The government 
can therefore carry its burden by submitting 
evidence that demonstrates the property is 
contraband or the property falls within the 
court’s forfeiture order.  See, e.g., [United 
States v.] Harrell, 530 F.3d [1051,] 1056–57 
[(9th Cir. 2008)].  But showing the property is 
contraband or forfeit is not the only way the 
government can justify retaining the property; 
the government can otherwise retain property if 
it can show a “legitimate reason” for doing so.  
See, e.g., Kriesel, 720 F.3d at 1145–47 (holding 
that the government’s retention of the 
defendant’s blood sample was “reasonable under 
the circumstances” because the government needed 
the sample to ensure the accuracy of future DNA 
identifications). 
 
United States v. Gladding, 775 F.3d 1149, 1152–53 (9th Cir. 
2014) (some alterations in Gladding). 
 
 
Here, PacMar filed its Rule 41(g) motion after Kao 
pleaded guilty to the charges that serve the basis for his 
arrest and the seizure of the cellular telephone.  A presumption 
thus existed that the cellular telephone should be returned 
unless there was a “legitimate reason” for the Government to 
retain it that was “reasonable”.  The Government did not object 
to returning a copy of the data extracted from the cellular 
telephone and represented that the cellular telephone 
“constitutes and contains evidence in [both the 2021 Indictment 
and the 2023 Indictment cases].”  [Government’s Response to 
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Motion for Return of Property Pursuant to Rule 41(g), filed 
1/26/23 (dkt. no. 84), at 2.]  It requested that the return 
should be limited to a copy of the data extracted.  See id. at 
3. 
 
 
Under the circumstances of this matter, the Court 
finds that PacMar is a “person aggrieved” “by the deprivation of 
property” for purposes of a Rule 41(g) motion and, because Kao 
has pleaded guilty, PacMar is presumed to have a right to the 
cellular telephone’s return.  The burden, then, shifts to the 
Government to demonstrate that it has a legitimate reason to 
retain the property.  Because the Government has demonstrated 
that it needs the cellular telephone (or more correctly, the 
contents of the cellular telephone, which is the data), it has 
partially rebutted the presumption of return.  Rule 41(g) 
provides, in relevant part, that in granting the Rule 41(g) 
motion, the property must be returned but the Court “may impose 
reasonable conditions to protect access to the property and its 
use in later proceedings.”  Fed. R. Crim. P. 41(g). 
 
 
The Court further finds that a reasonable condition is 
that the return of property should be limited to a copy of the 
cellular telephone’s contents; i.e., the data, and that the 
cellular telephone itself may continue to be retained by the 
Government until Kao’s sentencing has been completed for those 
criminal charges covered by the 2021 Indictment, and the 
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completion of the criminal charges covered by the 2023 
Indictment, when the Government no longer has any evidentiary 
need for the property in question. 
 
 
Kao argues that he has a Fifth Amendment privilege 
that prevents return of the property in question.  He has 
pleaded guilty to Counts 1 through 8 of the 2021 Indictment.  He 
has waived his right to self-incrimination only as to the crimes 
that he admitted.  United States v. Pierce, 561 F.2d 735, 738 
(9th Cir. 1977) (“The defendant retains his privilege as to 
crimes for which he may still be liable.” (citations omitted)).  
It is undisputed that the cellular telephone was seized when Kao 
was arrested in relation to the 2021 Indictment, although the 
Government has vaguely represented that the data taken from the 
cellular telephone may also pertain to criminal charges 
contained in the 2023 Indictment. 
 
 
First, Kao fails to explain why the contents of the 
cellular telephone are protected by his Fifth Amendment right 
against self-incrimination in the 2023 Indictment or some other 
crime charged against him.  If it is because the seizure and 
search were illegal as to one or more of these offenses, then 
the proper course of action is a motion to suppress. 
 
 
Second, certain acts, while incriminating, are not 
within the privilege against self-incrimination.  See, e.g., Doe 
v. United States, 487 U.S. 201, 210 (1988) (noting that a 
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suspect may be compelled to provide blood sample or voice 
exemplar).  However, even if the seizure and search of the 
cellular telephone was permissible, the self-incrimination 
privilege protects verbal and written communications as well as 
acts that imply assertions of fact, if testimonial.  See id. at 
219.  “The difficult question whether a compelled communication 
is testimonial for purposes of applying the Fifth Amendment 
often depends on the facts and circumstance of the particular 
case.”  Id. at 214-15 (citation omitted).  The Court finds that 
Kao has not demonstrated facts as to which parts of the data 
contained on the cellular telephone are testimonial and thus 
protected by the privilege. 
 
 
Third, Kao argues that his right to privacy protects 
the data contained on the cellular telephone from being 
disclosed. 
[A] criminal defendant may invoke the protections 
of the Fourth Amendment only if he can show that 
he had a legitimate expectation of privacy in the 
place searched or the item seized.  Smith v. 
Maryland, 442 U.S. 735, 740, 99 S. Ct. 2577, 61 
L. Ed.2d 220 (1979).  This expectation is 
established where the claimant can show: (1) a 
subjective expectation of privacy; and (2) an 
objectively reasonable expectation of privacy.  
See id. (citing Katz [v. United States], 389 U.S. 
[347,] 351, 361, 88 S. Ct. 507[, 19 L. Ed. 2d 576 
(1967)]); United States v. Shryock, 342 F.3d 948, 
978 (9th Cir. 2003).  It is [the defendant’s] 
burden to prove both elements.  United States v. 
Caymen, 404 F.3d 1196, 1199 (9th Cir. 2005) 
(citation omitted). 
 
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United States v. Ziegler, 474 F.3d 1184, 1189 (9th Cir. 2007) 
(emphasis in Ziegler).  Kao contends that he had a subjective 
expectation of privacy as to the content he created or kept on 
the cellular telephone’s data.  Pertinent to the second element, 
he must demonstrate whether it was objectively reasonable to 
expect privacy on the company-owned cellular telephone; whether 
the cellular telephone’s data was password protected; and 
whether he gave valid consent to the Government to search the 
cellular telephone and obtain the data.  Kao has the burden of 
proving that he had an objectively reasonable expectation of 
privacy, but he provides no evidence. 
 
 
Finally, Kao contends that the magistrate judge should 
have ordered that Kao inspect the data for personal information 
before it is produced and should have required a basic inventory 
of the files.  If the data was obtained from the cellular 
telephone taken from Kao, then presumably he could or did obtain 
a copy of it in discovery.  If not, then a motion to compel is 
the proper vehicle.  Kao contents that “a special master should 
be appointed at PacMar’s cost to review and segregate the 
data[]” obtained from the cellular telephone.  [Appeal at 19. ]  
Kao, however, provides no legal authority for this proposition.  
The Court thus denies the request. 
 
 
Ultimately, although the 2/15 Order does not provide 
an analysis of the law and facts it relied upon, the Government 
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has demonstrated the requisite showing to keep the cellular 
telephone and produced data.  Based on the aforementioned 
analysis, the Court cannot conclude that the magistrate judge 
was clearly erroneous in granting PacMar’s motion.  The privacy 
right arguments raised by Kao are more appropriate for 
consideration in the civil lawsuits filed against Kao in the 
context of a motion for protective order.  Therefore, the 
Government is directed to provide a copy of the data extracted 
from the cellular telephone to PacMar by May 1, 2023.  
Accordingly, the Appeal is denied. 
CONCLUSION 
 
 
On the basis of the foregoing, Kao’s Objections to and 
Appeal from Dispositive Order [Document 92] of Magistrate Judge 
filed March 1, 2023, is HEREBY DENIED.  The Government is 
DIRECTED to provide a copy of the data extracted from the 
cellular telephone to PacMar by May 1, 2023. 
 
 
IT IS SO ORDERED. 
 
 
DATED AT HONOLULU, HAWAII, April 14, 2023. 
 
 
 
 
 
 
UNITED STATES OF AMERICA VS. MARTIN KAO; CR 21-00061 LEK; ORDER 
DENYING DEFENDANT/INTEREST PARTY MARTIN KAO’S OBJECTIONS TO AND 
APPEAL FROM DISPOSITIVE ORDER [DOCUMENT 92] OF MAGISTRATE JUDGE 
Case 1:21-cr-00061-LEK     Document 101     Filed 04/14/23     Page 12 of 12  PageID.871

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