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RESPONSE in Support by Pacmar Technologies LLC as to Martin Kao re 82… — PPP Attempt Conspiracy Legal Filings (Dkt. 90)

No. 1:21-cr-00061-LEK · Doc. 90 · Docket on CourtListener

Summary

A reply filed February 10, 2023 by movant PacMar Technologies LLC in support of its motion for return of property under Rule 41(g) of the Federal Rules of Criminal Procedure in United States v. Martin Kao, No. 1:21-cr-00061-LEK, in the U.S. District Court for the District of Hawaii (Doc. 90). It answers Kao's memorandum in opposition (Dkt. No. 89) and seeks the return of data from his company cellphone, which is in the possession of the DOJ. The reply argues that PacMar bought the phone and service plan and that its policies let it monitor the device, so Kao had no reasonable expectation of privacy. It also argues that Kao has no colorable Fifth Amendment claim because the DOJ already has the data, and that PacMar needs no warrant to recover its own property. It is signed by counsel Jesse W. Schiel and includes a supplemental declaration.

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Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 1 of 8 PageID.517

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, CR. NO. 21-00061 LEK

Plaintiff, REPLY IN SUPPORT OF MOTION
FOR RETURN OF PROPERTY
vs. PURSUANT TO RULE 41(G) OF
THE FEDERAL RULES OF
MARTIN KAO, CRIMINAL PROCEDURE;
SUPPLEMENTAL DECLARATION
Defendant. OF JAMES TOSHIZO OTA;
CERTIFICATE OF SERVICE

REPLY IN SUPPORT OF MOTION FOR RETURN OF PROPERTY
PURSUANT TO RULE 41(G) OF THE FEDERAL RULES OF
CRIMINAL PROCEDURE
Defendant Kao’s Memorandum in Opposition [Dkt. No. 89] (“MIO”) is

fraught with attempts to mischaracterize PacMar’s request for the return of its
Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 2 of 8 PageID.518

property which is in the possession of the DOJ, while raising no actual or credible

objections to the return of such property.1 Defendant Kao raises only hypothetical

and speculative objections based on these mischaracterizations and attempts to

mislead the Court on the applicable standards of law relevant to this Motion.

Contrary to Defendant Kao’s unsupported allegations of fact, PacMar owned the

cellphone in question and retained the right to monitor and inspect the cellphone at

any time. Contrary to Defendant Kao’s misplaced assertions of law, PacMar is

neither a government entity seeking to investigate the cellphone nor is it requesting

access to unknown information in the DOJ’s possession. PacMar is simply seeking

the return of its own property—that is it. For the reasons explained in greater detail

below, Defendant Kao’s arguments fail and the Court should grant the Motion.

I. PacMar Owns Defendant Kao’s Company Cellphone and Defendant
Kao had No Reasonable Expectation of Privacy for Data on His
Company Cellphone.
As admitted to by Defendant Kao in his MIO, PacMar bought and paid for

both the Company Cellphone and the ongoing service plan with Verizon. See MIO

at 13; Exhibit 5 to Motion at 2. Defendant Kao would have the Court ignore this

fact, and argues instead that he “had possession and use of the phone.” MIO at 13.

However, Defendant Kao had the possession and use of the cellphone because it was

1
All references and short titles used herein are the same as those used and identified
in PacMar’s Motion.

2
Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 3 of 8 PageID.519

issued to him by PacMar, subject to the conditions and restrictions on use set forth

in PacMar’s Information System Security Policies and Procedures Manual and

Employee Mobile Device Policy. See Exhibits 3 and 4 to Motion. Under these

policies, PacMar retained a right to “monitor equipment, systems, and network

traffic at any time . . . .” Exhibit 3 to Motion at 8. Defendant Kao therefore had no

reasonable expectation of privacy for the data on his Company Cellphone, as PacMar

had, at all times, a right to monitor and inspect such data to ensure proper use of the

cellphone in furtherance of its business operations and security policies.2 See City

of Ontario, Cal. v. Quon, 560 U.S. 746 (2010) (“Even if he could assume some level

of privacy would inhere in his messages, it would not have been reasonable for [the

employee] to conclude that his messages were in all circumstances immune from

scrutiny.”); accord Mintz v. Mark Bartelstein & Associates, Inc., 885 F. Supp. 2d

987, 1000 (C.D. Cal. 2012) (explaining “the Supreme Court found [in Quon] that

the employee ‘had only a limited expectation’ of privacy in the text messages” but

not in the other data associated with an employer-owned cellphone).3

2
PacMar, as a federal contractor, is in fact under a heightened duty to maintain the
security of its information and equipment, beyond that of a typical private-sector
employer. See Ota Supp. Decl. ¶ 6.
3
Defendant Kao also suggests that his relinquishment of the cellphone to the DOJ
was voluntary, see MIO at 13 (“It is believed Mr. Kao cooperated with the US.”),
further eroding any claims of an expectation of privacy in the cellphone and its data.
See United States v. Wahchumwah, 710 F.3d 862, 867 (9th Cir. 2013) (“[A]

3
Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 4 of 8 PageID.520

Defendant Kao also argues, without merit or any supporting evidence or

authority, that the DOJ treated the Company Cellphone as his property when it was

seized during his arrest. See MIO at 13. This is untrue. PacMar’s communications

with the DOJ, the DOJ’s Response to this Motion [Dkt. No. 84], and the prior

conduct of the DOJ in returning PacMar’s other property seized at the time of

Defendant Kao’s arrest all belie these claims. See, e.g., Exhibit 9 to Motion

(suggesting that PacMar file a motion for return of property in order to recover the

data in question). Just as the DOJ returned PacMar’s servers to it following the arrest

of Defendant Kao, see Supplemental Declaration of James Toshizo Ota (“Ota Supp.

Decl.”) ¶ 5, which server included all of its employees’ data and correspondences

stored on it, so now is PacMar simply seeking the DOJ’s return of its Company

Cellphone.4 PacMar’s servers and company cellphones are both company property

and, as it did with PacMar’s server, the DOJ is prepared to return the Company

Cellphone data to PacMar.5

defendant generally has no privacy interest in that which he voluntarily reveals to a
government agent.”).
4
PacMar would be entitled to the return of the physical cellphone and all of its
contents if not for the DOJ’s stated position that the cellphone is being kept for use
as evidence in further potential criminal matters.
5
PacMar’s policies treat all company-issued equipment, including computers,
servers, accounts, and cellphones in the same way. See Exhibit 3 to Motion at 7
(“Martin Defense Group sensitive information stored on electronic and computing
devices whether owned or leased by Martin Defense Group, a User, or a third party,
remains the sole property of Martin Defense Group.”).

4
Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 5 of 8 PageID.521

II. Defendant Kao Has No Colorable Claim to Fifth Amendment Privilege
or Other Constitutional Protections.
Defendant Kao states in his MIO that he is unable to testify as to any claims

of privacy he may have over the data on the Company Cellphone (which, as

explained above, he does not have) due to self-incrimination protections under the

Fifth Amendment and similar state-level protections. It must be noted, however,

that the DOJ already has in its possession the Company Cellphone and all data stored

therein. As such, there is no possible threat of self-incrimination for any data stored

on his Company Cellphone. Any incriminating evidence is already subject to use

by the DOJ in the multiple criminal charges Defendant Kao is facing. Moreover,

because Defendant Kao had no reasonable expectation of privacy on a company-

issued device, see Discussion, supra § I, no testimony is required on his part as to

“his history relating to cellphone use at the company; his recollection regarding the

documents 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.” MIO at

Defendant Kao also attempts to force inapplicable standards into the Court’s

analysis, stating “Cellphone data is typically obtained only through a search

warrant.” MIO at 12. PacMar is not a governmental entity, and therefore does not

require a warrant to recover data and information on its own property, much less the

5
Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 6 of 8 PageID.522

ability to obtain one. Defendant Kao’s cited caselaw makes this point clear: “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.” MIO at 12 (emphasis

added) (quoting Riley v. California, 573 U.S. 373, 403 (2014)).

Nor is PacMar’s request for the return of its own property akin to a FOIA

request as Defendant Kao argues in his MIO at 9–10. Contrary to Defendant Kao’s

baseless statements, PacMar is indeed “seeking records on itself,” insofar as the data

stored on the Company Cellphone is PacMar’s own property and was, at all times,

subject to PacMar’s monitoring, inspection, and requests for return. See Exhibit 3

to Motion at 8 (“For security and network maintenance purposes, Designated IT

Personnel will monitor equipment, systems, and network traffic at any time, per

Martin Defense Group’s Monitoring and Systems/Communications Protection

Policy.”).

Defendant Kao further argues that PacMar’s suggestion that the data be turned

over via a Cellebrite report somehow converts the data from PacMar’s property into

the “product of a criminal investigation.” MIO at 11. Again, despite Defendant

Kao’s mischaracterization of PacMar’s request for return of property (as is proper

under Rule 41(g), see Motion at 6–7 (citing United States v. Comprehensive Drug

Testing, Inc., 621 F.3d 1162, 1172 (9th Cir. 2010), overruled on other grounds in

Demaree v. Pederson, 887 F.3d 870 (9th Cir. 2018) (per curiam)), the data itself is

6
Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 7 of 8 PageID.523

PacMar’s property, and not the product of the DOJ’s investigation into Defendant

Kao’s criminal conduct. The reference to a Cellebrite report was made only on the

understanding that the data is portable in that form for return to PacMar by the DOJ.

III. Defendant Kao Raises No Meaningful Objections to the Return of the
Company Cellphone to PacMar.
Beyond effectively ignoring the fact that PacMar bought, paid for, and owns

the Company Cellphone and has a right to a return of the data stored therein, and his

attempts to inject inapplicable caselaw into his arguments, Defendant Kao raises

only vague assertions that the evidence presented by PacMar is somehow deficient.

Defendant Kao does not raise any specific objections and does not directly dispute

that the Company Cellphone is owned by PacMar. Instead, Defendant Kao

selectively quotes irrelevant portions of the PacMar (then Navatek) Employee

Handbook in a transparent effort to distract the Court from the applicable clauses.

The relevant language from the Employee Handbook is quoted in PacMar’s Motion

and is entirely ignored in Defendant Kao’s Opposition. See Motion at 3 (quoting

Exhibit 1 to Motion at §§ C-22 and -23).

Defendant Kao cannot credibly argue that he was not aware of the policies,

conditions, and restrictions on the use of the Company Cellphone, and certainly not

as to the applicable company policies from 2018 and on, see Discussion, supra § I,

when he was the President and CEO of PacMar (then MDG). See Exhibits 3 and 4

to Motion. Defendant Kao was not just a typical employee who may or may not

7
Case 1:21-cr-00061-LEK Document 90 Filed 02/10/23 Page 8 of 8 PageID.524

have been aware of company policies. Indeed, he was the principal executive officer

of the Company, in charge of supervising and overseeing the development,

implementation of, and compliance with said policies. See Ota Supp. Decl. ¶ 7.

Defendant Kao’s attempts to misdirect the Court’s analysis ring hollow and should

be rejected.

IV. Conclusion
For the foregoing reasons, as well as any further adduced at the hearing on

this matter, the Motion should be granted and an order issued directing the return of

PacMar’s data from Defendant Kao’s Company Cellphone.

DATED: Honolulu, Hawaii, February 10, 2023.

/s/ Jesse W. Schiel
DAVID M. LOUIE
JESSE W. SCHIEL

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

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