Speaker 1: You're listening to Bloomberg Law. I'm June Gronzo with Greg Store.
Speaker 1: In this day of electronic surveillance, we all know about
Speaker 1: the government wire tapping phones, but you may not know
Speaker 1: that just because the government has a lawful warrant to
Speaker 1: wire tap your phone, that doesn't mean FBI agents can
Speaker 1: tape every conversation. Take the case of Craig Dramal, a
Speaker 1: former Galleon Group trader convicted of insider trading. Dramal's wife, Arlene,
Speaker 1: claimed that FBI agents wrongfully ease dropped on more than
Speaker 1: one d eight of her intimate conversations with her husband
Speaker 1: while they were lawfully tapping their phone to get information
Speaker 1: on insider trading. New York Federal Judge Richard Sullivan refused
Speaker 1: to throw out those conversations, but Sullivan called the FBI's
Speaker 1: actions nothing short of disgraceful and said he was deeply
Speaker 1: troubled by this unnecessarily and apparently voyeuristic intrusion into the
Speaker 1: Jamal's private life. In other words, the FBI should have
Speaker 1: hung up the phone. Arlene Jamal sued the FBI, and
Speaker 1: in a departure, the FBI has settled the suit. Our
Speaker 1: guest as former federal prosecutor and and criminal trial attorney
Speaker 1: George Newhouse, a partner at Denton's. George, how unusual is
Speaker 1: it for the FBI to settle a case? Good morning, June. Uh.
Speaker 1: It's really the case that the FBI, or frankly, the
Speaker 1: federal government settles these cases, particularly involving law enforcement. So
Speaker 1: that's that is something to take note of. But of
Speaker 1: course we don't know the amount of the money that
Speaker 1: was paid or whatever. The terms of the settlement are
Speaker 1: as confidential, so it may have been settled for all
Speaker 1: low amount. Well, George, what is it about this case
Speaker 1: if we don't know the terms of the settlement, What
Speaker 1: is it about the case that might have prompted the
Speaker 1: FBI to settle here, you know, whereas normally they don't. Well,
Speaker 1: there are two now to at least two federal judges,
Speaker 1: Judge Sullivan in the Southern District of New York, who
Speaker 1: who handled the criminal prosecution of Craig Dremal, the Galleon
Speaker 1: trader whose phone was being tapped um and a judge
Speaker 1: in Connecticut who is holding the UH the case, the
Speaker 1: civil case against the FBI agents. So two judges now
Speaker 1: have sharply criticized the FBI sum conduct in monitoring these
Speaker 1: phone conversations pursued into Title three. So I think when
Speaker 1: when federal judges are critical and suggests that there was
Speaker 1: wrongful conduct, then the government quickly tries to put those
Speaker 1: cases to bed. George, explain what Title three is and
Speaker 1: what restrictions it imposes on the government. Title three is
Speaker 1: actually part of the Omnibus Crime Control on Safe Street
Speaker 1: Acts of but it's commonly referred to Title three, or
Speaker 1: sometimes simply as T three. UM. That's a federal law
Speaker 1: that allowed past the nineteen sixty eight that allows federal
Speaker 1: agents the FBI to place wire taps on phone conversations
Speaker 1: between US citizens occurring inside the United States, conduct which
Speaker 1: of course a private citizen does is a is a felony,
Speaker 1: and before that the government had no authorization to conduct
Speaker 1: those kind of monitoring. It was initially passed in order
Speaker 1: to combat organized crime and narcotics trafficking. UM. And the
Speaker 1: law does, in some circumstances allow the government to put
Speaker 1: this wire tap on, and that of course is monitored
Speaker 1: by federal agents who listen in on these phone conversations.
Speaker 1: And George, what are agents supposed to do? So? They
Speaker 1: tap somebody's phone, some of those conversations are going to
Speaker 1: be relevant to the investigation. Uh, is a rule just
Speaker 1: that they're supposed to hang up as soon as they
Speaker 1: realize that it's not relevant or or or is it
Speaker 1: different because of a spouse? How does it work now?
Speaker 1: Exactly right? That's that's a great question. The law imposes
Speaker 1: a number of stringent requirements restrictions on what the government
Speaker 1: can do when they're conducting the tap, so they always
Speaker 1: have to have This is one reason why these taps
Speaker 1: are fairly rare because they are exceedingly labor intensive for
Speaker 1: the federal agency. So literally scores of agents have to
Speaker 1: be around the clock listening in on phone calls because
Speaker 1: you never know when the call is going to come in,
Speaker 1: and they're required to monitor every call. Then here's the wrinkle.
Speaker 1: They're required to do something called minimization, and they receive
Speaker 1: and did in this case receive detailed instructions from the
Speaker 1: supervising Assistant U S Attorney in New York that basically
Speaker 1: said to the agents, you can listen to every call,
Speaker 1: but once you determine that it's not pertinent or relevant
Speaker 1: to what we're investigating. In this case, insider trading, then
Speaker 1: you must immediately switch off the machine. You you have
Speaker 1: to stop listening, you have to stop recording, and you
Speaker 1: can every now and then you can go back because
Speaker 1: they can still see that the calls are going on,
Speaker 1: they can go in and and listen for a minute to
Speaker 1: determine to make sure that they're not talking about matters
Speaker 1: that they're authorized to listen to, so it is restricted
Speaker 1: by subject matter. And then finally they're told, if you
Speaker 1: are listening to a privileged conversation, if you're listening to
Speaker 1: a conversation between the subject and his lawyer, or a
Speaker 1: subject and his spouse, that's the marital privilege, then you
Speaker 1: have to be especially careful that we don't intrude into
Speaker 1: that protected sphere. And that was what occurred in this case.
Speaker 1: There were, as June indicated, a hundred and eighty calls
Speaker 1: between Craig and his wife Arlene, and a number of
Speaker 1: those uh the monitoring went on too long before the
Speaker 1: agents switched it off, and at least three or four
Speaker 1: Judge Sullivan found were indefensible. Those calls apparently got into
Speaker 1: some very intimate details that sometimes, as we all know,
Speaker 1: husbands and wives will have conversations that they don't want
Speaker 1: anyone else to hear. George, as a former federal prosecutor,
Speaker 1: do FBI agents often ignore those minimization requirements or expand
Speaker 1: what they're listening to wait a little too long? Well,
Speaker 1: here's the problem that the answer is the FBI. I
Speaker 1: have now worked with them for many years as a prosecutor,
Speaker 1: and I've worked on the other side as a white
Speaker 1: collar defense lawyer. This is the flagship of federal agencies.
Speaker 1: This is an agency with amazing people. They're they're dedicated,
Speaker 1: they're intelligent. There they're well screened, but they do make mistakes.
Speaker 1: And these minimization rules, as you can imagine, are very
Speaker 1: difficult to actually implement because again, you can listen to
Speaker 1: every conversation, but how and at what point do you
Speaker 1: determine that it's not pertinent. So the instructions were given. Um,
Speaker 1: there were thousands of calls that were monitored, and the
Speaker 1: judge ultimately allowed the the monitored calls to come into evidence.
Speaker 1: But there were some instances where mistakes were made. In Actually,
Speaker 1: the court in Connecticut dismissed the case against sixteen thirteen
Speaker 1: of the sixteen agents and only said, well, three agents
Speaker 1: may have made some mistakes. So the answer is it's
Speaker 1: actually difficult to implement um. I think the agents were
Speaker 1: probably operating in good faith, trying to do the best
Speaker 1: they can, but some of them did a better job
Speaker 1: and minimizing than others, and that was really what the
Speaker 1: case turned up. George, can you talk just a bit
Speaker 1: more about you mentioned marital privilege and how does that
Speaker 1: work in practice? I mean, if if the wife call
Speaker 1: calls them up and her first words are the inside
Speaker 1: information arrived, surely they can they can keep listening to that, right,
Speaker 1: great question, Absolutely correct. So marital privilege, like the attorney
Speaker 1: client privilege, is subject to something called the crime fraud exception.
Speaker 1: So if if the subject of the conversation is, hey, dear,
Speaker 1: you know, the insider trading information that we're getting is
Speaker 1: really great, then the agents would be allowed to listen
Speaker 1: to that and to monitor that. But other than that,
Speaker 1: the instructions were clear. If it's between the husband and
Speaker 1: the wife and they're talking about the school kids that
Speaker 1: they're talking about, as in this case marital problems, that's
Speaker 1: clearly not relevant and they have to switch it off.
Speaker 1: It's just about a minute. Is the FBS the FBI
Speaker 1: under a lot of scrutiny late lately in pressure because
Speaker 1: of this and the FBI agent leaking in the Billy
Speaker 1: Walters case. Well, again, the FBI is a large agency.
Speaker 1: They have thousands of agents. There are always going to
Speaker 1: be some isolated incidents where an agent does something that
Speaker 1: is um uh called into question, and I think the
Speaker 1: agency responds appropriately to that. But I don't see any
Speaker 1: any trend here. The work that they do is um
Speaker 1: by all measures usually exemplary. Um. I don't I don't
Speaker 1: see a trend here. Um. The interesting thing about this case,
Speaker 1: by the ways, this was the first time in around
Speaker 1: two thousand nine when they went up on a wire
Speaker 1: that any federal agency had ever used a wire tap
Speaker 1: in a securities fraud investigation. So that did attract some attention.
Speaker 1: Thank you so much for being on Bloomberg Law. As always,
Speaker 1: it's a pleasure to have you. That's former federal prosecutor
Speaker 1: George Newhouse. He is a partner at Denton's