1 00:00:02,040 --> 00:00:05,600 Speaker 1: You're listening to Bloomberg Law. I'm June Gronzo with Greg Store. 2 00:00:06,519 --> 00:00:09,559 Speaker 1: In this day of electronic surveillance, we all know about 3 00:00:09,600 --> 00:00:12,600 Speaker 1: the government wire tapping phones, but you may not know 4 00:00:12,680 --> 00:00:15,440 Speaker 1: that just because the government has a lawful warrant to 5 00:00:15,480 --> 00:00:18,800 Speaker 1: wire tap your phone, that doesn't mean FBI agents can 6 00:00:18,840 --> 00:00:22,880 Speaker 1: tape every conversation. Take the case of Craig Dramal, a 7 00:00:22,920 --> 00:00:28,080 Speaker 1: former Galleon Group trader convicted of insider trading. Dramal's wife, Arlene, 8 00:00:28,120 --> 00:00:32,040 Speaker 1: claimed that FBI agents wrongfully ease dropped on more than 9 00:00:32,159 --> 00:00:35,400 Speaker 1: one d eight of her intimate conversations with her husband 10 00:00:35,760 --> 00:00:38,800 Speaker 1: while they were lawfully tapping their phone to get information 11 00:00:38,920 --> 00:00:43,239 Speaker 1: on insider trading. New York Federal Judge Richard Sullivan refused 12 00:00:43,240 --> 00:00:47,120 Speaker 1: to throw out those conversations, but Sullivan called the FBI's 13 00:00:47,200 --> 00:00:50,760 Speaker 1: actions nothing short of disgraceful and said he was deeply 14 00:00:50,840 --> 00:00:55,800 Speaker 1: troubled by this unnecessarily and apparently voyeuristic intrusion into the 15 00:00:55,880 --> 00:00:59,160 Speaker 1: Jamal's private life. In other words, the FBI should have 16 00:00:59,240 --> 00:01:02,640 Speaker 1: hung up the phone. Arlene Jamal sued the FBI, and 17 00:01:02,720 --> 00:01:06,360 Speaker 1: in a departure, the FBI has settled the suit. Our 18 00:01:06,400 --> 00:01:11,440 Speaker 1: guest as former federal prosecutor and and criminal trial attorney 19 00:01:11,480 --> 00:01:16,160 Speaker 1: George Newhouse, a partner at Denton's. George, how unusual is 20 00:01:16,200 --> 00:01:21,039 Speaker 1: it for the FBI to settle a case? Good morning, June. Uh. 21 00:01:21,240 --> 00:01:24,840 Speaker 1: It's really the case that the FBI, or frankly, the 22 00:01:25,120 --> 00:01:29,480 Speaker 1: federal government settles these cases, particularly involving law enforcement. So 23 00:01:29,760 --> 00:01:32,600 Speaker 1: that's that is something to take note of. But of 24 00:01:32,640 --> 00:01:36,400 Speaker 1: course we don't know the amount of the money that 25 00:01:36,520 --> 00:01:38,800 Speaker 1: was paid or whatever. The terms of the settlement are 26 00:01:38,840 --> 00:01:41,760 Speaker 1: as confidential, so it may have been settled for all 27 00:01:41,840 --> 00:01:45,520 Speaker 1: low amount. Well, George, what is it about this case 28 00:01:46,000 --> 00:01:47,760 Speaker 1: if we don't know the terms of the settlement, What 29 00:01:47,840 --> 00:01:50,920 Speaker 1: is it about the case that might have prompted the 30 00:01:50,960 --> 00:01:55,840 Speaker 1: FBI to settle here, you know, whereas normally they don't. Well, 31 00:01:55,880 --> 00:01:58,360 Speaker 1: there are two now to at least two federal judges, 32 00:01:58,560 --> 00:02:02,080 Speaker 1: Judge Sullivan in the Southern District of New York, who 33 00:02:02,520 --> 00:02:07,080 Speaker 1: who handled the criminal prosecution of Craig Dremal, the Galleon 34 00:02:07,320 --> 00:02:12,160 Speaker 1: trader whose phone was being tapped um and a judge 35 00:02:12,240 --> 00:02:16,960 Speaker 1: in Connecticut who is holding the UH the case, the 36 00:02:17,000 --> 00:02:19,800 Speaker 1: civil case against the FBI agents. So two judges now 37 00:02:20,080 --> 00:02:26,680 Speaker 1: have sharply criticized the FBI sum conduct in monitoring these 38 00:02:26,680 --> 00:02:30,600 Speaker 1: phone conversations pursued into Title three. So I think when 39 00:02:30,639 --> 00:02:33,880 Speaker 1: when federal judges are critical and suggests that there was 40 00:02:33,919 --> 00:02:37,720 Speaker 1: wrongful conduct, then the government quickly tries to put those 41 00:02:37,760 --> 00:02:41,799 Speaker 1: cases to bed. George, explain what Title three is and 42 00:02:41,919 --> 00:02:47,200 Speaker 1: what restrictions it imposes on the government. Title three is 43 00:02:47,240 --> 00:02:50,680 Speaker 1: actually part of the Omnibus Crime Control on Safe Street 44 00:02:50,720 --> 00:02:54,959 Speaker 1: Acts of but it's commonly referred to Title three, or 45 00:02:55,040 --> 00:02:58,519 Speaker 1: sometimes simply as T three. UM. That's a federal law 46 00:02:58,600 --> 00:03:01,560 Speaker 1: that allowed past the nineteen sixty eight that allows federal 47 00:03:01,639 --> 00:03:07,480 Speaker 1: agents the FBI to place wire taps on phone conversations 48 00:03:07,520 --> 00:03:12,640 Speaker 1: between US citizens occurring inside the United States, conduct which 49 00:03:12,680 --> 00:03:16,040 Speaker 1: of course a private citizen does is a is a felony, 50 00:03:16,120 --> 00:03:19,480 Speaker 1: and before that the government had no authorization to conduct 51 00:03:19,560 --> 00:03:23,920 Speaker 1: those kind of monitoring. It was initially passed in order 52 00:03:23,960 --> 00:03:28,880 Speaker 1: to combat organized crime and narcotics trafficking. UM. And the 53 00:03:29,000 --> 00:03:32,840 Speaker 1: law does, in some circumstances allow the government to put 54 00:03:32,840 --> 00:03:36,040 Speaker 1: this wire tap on, and that of course is monitored 55 00:03:36,080 --> 00:03:39,320 Speaker 1: by federal agents who listen in on these phone conversations. 56 00:03:39,880 --> 00:03:42,720 Speaker 1: And George, what are agents supposed to do? So? They 57 00:03:43,560 --> 00:03:46,800 Speaker 1: tap somebody's phone, some of those conversations are going to 58 00:03:47,120 --> 00:03:51,160 Speaker 1: be relevant to the investigation. Uh, is a rule just 59 00:03:51,320 --> 00:03:53,680 Speaker 1: that they're supposed to hang up as soon as they 60 00:03:53,720 --> 00:03:56,880 Speaker 1: realize that it's not relevant or or or is it 61 00:03:56,880 --> 00:03:59,920 Speaker 1: different because of a spouse? How does it work now? 62 00:04:00,040 --> 00:04:03,440 Speaker 1: Exactly right? That's that's a great question. The law imposes 63 00:04:03,480 --> 00:04:07,800 Speaker 1: a number of stringent requirements restrictions on what the government 64 00:04:07,840 --> 00:04:11,200 Speaker 1: can do when they're conducting the tap, so they always 65 00:04:11,240 --> 00:04:13,720 Speaker 1: have to have This is one reason why these taps 66 00:04:13,760 --> 00:04:18,039 Speaker 1: are fairly rare because they are exceedingly labor intensive for 67 00:04:18,080 --> 00:04:21,640 Speaker 1: the federal agency. So literally scores of agents have to 68 00:04:21,720 --> 00:04:24,720 Speaker 1: be around the clock listening in on phone calls because 69 00:04:24,720 --> 00:04:26,640 Speaker 1: you never know when the call is going to come in, 70 00:04:27,120 --> 00:04:31,479 Speaker 1: and they're required to monitor every call. Then here's the wrinkle. 71 00:04:31,720 --> 00:04:35,160 Speaker 1: They're required to do something called minimization, and they receive 72 00:04:35,400 --> 00:04:38,560 Speaker 1: and did in this case receive detailed instructions from the 73 00:04:38,760 --> 00:04:42,480 Speaker 1: supervising Assistant U S Attorney in New York that basically 74 00:04:42,520 --> 00:04:45,479 Speaker 1: said to the agents, you can listen to every call, 75 00:04:46,000 --> 00:04:50,039 Speaker 1: but once you determine that it's not pertinent or relevant 76 00:04:50,080 --> 00:04:53,920 Speaker 1: to what we're investigating. In this case, insider trading, then 77 00:04:54,000 --> 00:04:57,159 Speaker 1: you must immediately switch off the machine. You you have 78 00:04:57,279 --> 00:05:01,560 Speaker 1: to stop listening, you have to stop recording, and you 79 00:05:01,600 --> 00:05:03,880 Speaker 1: can every now and then you can go back because 80 00:05:03,880 --> 00:05:06,280 Speaker 1: they can still see that the calls are going on, 81 00:05:06,640 --> 00:05:08,279 Speaker 1: they can go in and and listen for a minute to 82 00:05:08,400 --> 00:05:11,880 Speaker 1: determine to make sure that they're not talking about matters 83 00:05:11,520 --> 00:05:15,000 Speaker 1: that they're authorized to listen to, so it is restricted 84 00:05:15,000 --> 00:05:19,000 Speaker 1: by subject matter. And then finally they're told, if you 85 00:05:19,080 --> 00:05:22,120 Speaker 1: are listening to a privileged conversation, if you're listening to 86 00:05:22,160 --> 00:05:25,120 Speaker 1: a conversation between the subject and his lawyer, or a 87 00:05:25,160 --> 00:05:28,719 Speaker 1: subject and his spouse, that's the marital privilege, then you 88 00:05:28,800 --> 00:05:31,840 Speaker 1: have to be especially careful that we don't intrude into 89 00:05:31,880 --> 00:05:36,120 Speaker 1: that protected sphere. And that was what occurred in this case. 90 00:05:36,160 --> 00:05:39,880 Speaker 1: There were, as June indicated, a hundred and eighty calls 91 00:05:39,960 --> 00:05:45,320 Speaker 1: between Craig and his wife Arlene, and a number of 92 00:05:45,360 --> 00:05:48,640 Speaker 1: those uh the monitoring went on too long before the 93 00:05:48,680 --> 00:05:52,160 Speaker 1: agents switched it off, and at least three or four 94 00:05:52,920 --> 00:05:57,640 Speaker 1: Judge Sullivan found were indefensible. Those calls apparently got into 95 00:05:57,680 --> 00:06:01,400 Speaker 1: some very intimate details that sometimes, as we all know, 96 00:06:01,560 --> 00:06:04,560 Speaker 1: husbands and wives will have conversations that they don't want 97 00:06:04,600 --> 00:06:08,039 Speaker 1: anyone else to hear. George, as a former federal prosecutor, 98 00:06:08,720 --> 00:06:16,800 Speaker 1: do FBI agents often ignore those minimization requirements or expand 99 00:06:16,960 --> 00:06:21,600 Speaker 1: what they're listening to wait a little too long? Well, 100 00:06:22,200 --> 00:06:25,120 Speaker 1: here's the problem that the answer is the FBI. I 101 00:06:25,800 --> 00:06:28,640 Speaker 1: have now worked with them for many years as a prosecutor, 102 00:06:28,680 --> 00:06:31,000 Speaker 1: and I've worked on the other side as a white 103 00:06:31,000 --> 00:06:35,000 Speaker 1: collar defense lawyer. This is the flagship of federal agencies. 104 00:06:35,520 --> 00:06:40,159 Speaker 1: This is an agency with amazing people. They're they're dedicated, 105 00:06:40,200 --> 00:06:44,920 Speaker 1: they're intelligent. There they're well screened, but they do make mistakes. 106 00:06:45,040 --> 00:06:48,440 Speaker 1: And these minimization rules, as you can imagine, are very 107 00:06:48,480 --> 00:06:52,120 Speaker 1: difficult to actually implement because again, you can listen to 108 00:06:52,160 --> 00:06:55,240 Speaker 1: every conversation, but how and at what point do you 109 00:06:55,279 --> 00:07:00,000 Speaker 1: determine that it's not pertinent. So the instructions were given. Um, 110 00:07:00,080 --> 00:07:03,240 Speaker 1: there were thousands of calls that were monitored, and the 111 00:07:03,640 --> 00:07:08,320 Speaker 1: judge ultimately allowed the the monitored calls to come into evidence. 112 00:07:08,640 --> 00:07:12,160 Speaker 1: But there were some instances where mistakes were made. In Actually, 113 00:07:12,360 --> 00:07:16,080 Speaker 1: the court in Connecticut dismissed the case against sixteen thirteen 114 00:07:16,160 --> 00:07:19,640 Speaker 1: of the sixteen agents and only said, well, three agents 115 00:07:19,720 --> 00:07:23,160 Speaker 1: may have made some mistakes. So the answer is it's 116 00:07:23,200 --> 00:07:26,320 Speaker 1: actually difficult to implement um. I think the agents were 117 00:07:26,360 --> 00:07:29,320 Speaker 1: probably operating in good faith, trying to do the best 118 00:07:29,360 --> 00:07:31,640 Speaker 1: they can, but some of them did a better job 119 00:07:31,680 --> 00:07:34,000 Speaker 1: and minimizing than others, and that was really what the 120 00:07:34,440 --> 00:07:36,720 Speaker 1: case turned up. George, can you talk just a bit 121 00:07:36,760 --> 00:07:40,520 Speaker 1: more about you mentioned marital privilege and how does that 122 00:07:40,560 --> 00:07:43,120 Speaker 1: work in practice? I mean, if if the wife call 123 00:07:43,440 --> 00:07:45,560 Speaker 1: calls them up and her first words are the inside 124 00:07:45,560 --> 00:07:49,360 Speaker 1: information arrived, surely they can they can keep listening to that, right, 125 00:07:50,160 --> 00:07:54,680 Speaker 1: great question, Absolutely correct. So marital privilege, like the attorney 126 00:07:54,760 --> 00:07:58,920 Speaker 1: client privilege, is subject to something called the crime fraud exception. 127 00:07:59,240 --> 00:08:05,800 Speaker 1: So if if the subject of the conversation is, hey, dear, 128 00:08:06,120 --> 00:08:08,800 Speaker 1: you know, the insider trading information that we're getting is 129 00:08:08,800 --> 00:08:11,520 Speaker 1: really great, then the agents would be allowed to listen 130 00:08:11,520 --> 00:08:14,480 Speaker 1: to that and to monitor that. But other than that, 131 00:08:14,920 --> 00:08:17,680 Speaker 1: the instructions were clear. If it's between the husband and 132 00:08:17,720 --> 00:08:19,880 Speaker 1: the wife and they're talking about the school kids that 133 00:08:19,960 --> 00:08:23,640 Speaker 1: they're talking about, as in this case marital problems, that's 134 00:08:23,680 --> 00:08:25,760 Speaker 1: clearly not relevant and they have to switch it off. 135 00:08:26,280 --> 00:08:30,440 Speaker 1: It's just about a minute. Is the FBS the FBI 136 00:08:30,640 --> 00:08:34,800 Speaker 1: under a lot of scrutiny late lately in pressure because 137 00:08:34,800 --> 00:08:37,720 Speaker 1: of this and the FBI agent leaking in the Billy 138 00:08:37,800 --> 00:08:43,600 Speaker 1: Walters case. Well, again, the FBI is a large agency. 139 00:08:43,679 --> 00:08:46,520 Speaker 1: They have thousands of agents. There are always going to 140 00:08:46,559 --> 00:08:51,199 Speaker 1: be some isolated incidents where an agent does something that 141 00:08:51,440 --> 00:08:54,560 Speaker 1: is um uh called into question, and I think the 142 00:08:54,600 --> 00:08:58,520 Speaker 1: agency responds appropriately to that. But I don't see any 143 00:08:58,760 --> 00:09:01,959 Speaker 1: any trend here. The work that they do is um 144 00:09:02,440 --> 00:09:06,360 Speaker 1: by all measures usually exemplary. Um. I don't I don't 145 00:09:06,360 --> 00:09:09,679 Speaker 1: see a trend here. Um. The interesting thing about this case, 146 00:09:09,720 --> 00:09:13,040 Speaker 1: by the ways, this was the first time in around 147 00:09:13,040 --> 00:09:15,440 Speaker 1: two thousand nine when they went up on a wire 148 00:09:15,840 --> 00:09:19,320 Speaker 1: that any federal agency had ever used a wire tap 149 00:09:19,360 --> 00:09:23,040 Speaker 1: in a securities fraud investigation. So that did attract some attention. 150 00:09:23,880 --> 00:09:26,600 Speaker 1: Thank you so much for being on Bloomberg Law. As always, 151 00:09:26,600 --> 00:09:29,160 Speaker 1: it's a pleasure to have you. That's former federal prosecutor 152 00:09:29,240 --> 00:09:32,720 Speaker 1: George Newhouse. He is a partner at Denton's