Second Circuit Allows Government’s Interlocutory Appeal Of Suppression Order In Spongetech Securities Fraud Prosecution

January 11, 2013

By: James W. Kraus

When it comes to certifying interlocutory appeals, if the government says it is so, then it must be so.  At least that it is the conclusion reached by the Second Circuit in a Per Curiamorder denying a motion to dismiss the government’s appeal of a suppression order handed down by Judge Dora L. Irizarry in the U.S. District Court for the Eastern District of New York.   United States v. Metter, No. 12-2423-cr (2d Cir. December 27, 2012).

The court rejected appellant Michael Metter’s argument that the government’s certification under 18 U.S.C. §3731 failed to establish that the evidence at issue (contents of over 60 computer hard drives and other electronic data) was “a substantial proof of fact material in the proceeding.”  In doing so, the court found that the U.S. Attorney’s certification, in and of itself, was conclusive of the fact that the evidence at issue was a “substantial proof” of material fact, and that in such circumstances, there is no need to scratch below the surface of that representation.  The court indicated that its treatment of this issue was consistent with the conclusion of “every circuit to have considered the question,” citing In re Grand Jury Investigation, 599 F.2d 1224, 1226 (3d Cir. 1979); United States v. Centracchio, 236 F.3d, 812, 813 (7th Cir. 2001); United States v. Johnson,  28 F.3d 920, 924 (8th Cir. 2000); and United States v. W.R. Grace, 526 F.3d 499, 506 (9th Cir. 2008) (en banc).

In 2010, the government indicted Metter and 6 others, alleging that he had participated in a fraudulent scheme relating to transactions in the common stock of Spongetech Delivery Systems, Inc., where he was the president and CEO.  Prior to the indictment, the government had seized computers from both the Spongetech offices and Metter’s home.  This included 61 computer hard drives, the company email server and contents of Metter’s four personal hard drives.  Approximately 1 year after the items were seized, Metter filed a motion to suppress the sized materials, arguing that the government’s failure to promptly conduct a forensic review of the seized materials constituted an unreasonable execution of the warrant that authorized the seizure of that evidence, in violation of the Fourth Amendment. The district court granted the motion, ordering blanket suppression of all of the seized materials.  United States v. Metter, 860 F.Supp. 2d 205, 216 (E.D.N.Y 2012).

The government immediately appealed the district court’s decision, asserting jurisdiction under 18 U.S.C.  §3731, which permits interlocutory appeals in limited circumstances.  Metter moved to dismiss the appeal, asserting that the government could not meet the basic requirements of section 3731, most notably the requirement that it be able to certify that the evidence that had been ordered suppressed constituted substantial proof of facts material in the proceeding.  Metter’s primary argument was that the government had represented several times in the proceedings before the district court that it had not yet conducted a review of the seized materials and, therefore, had no basis upon which to base its certification of substantiality and materiality.

Notwithstanding the logic of Metter’s argument, the Second Circuit sided with the government, concluding that the court’s jurisdictional inquiry begins and ends with a timely filling of the certification itself, and finding that there is no need to look behind the certification to determine its veracity.  In addition to stating that its decision was consistent with every other circuit to have considered the issue, the court noted that the text of section 3731 indicates that it is to “be liberally construed to effectuate its purposes.”

The full text of the opinion can be found here.

News & Events

Related News

“Investigations,” Medicare and Medicaid Fraud and Abuse, 2022-2023 ed.
November 2, 2022
Pietragallo attorneys Kevin Raphael, James Kraus, and Lee Goldfarb have revised Chapter 6 “Investigations” in the Medicare and Medicaid Fraud and Abuse, 2022-2023 ed. Read More
23 Pietragallo Lawyers Named in 2023 The Best Lawyers in America and Ones to Watch
August 18, 2022
Pietragallo Gordon Alfano Bosick & Raspanti, LLP is pleased to announce that 23 lawyers have been named as 2023 The Best Lawyers in America and 2023 Ones to Watch, including Tama Beth Kudman who was recognized as 2023 Lawyer of the Year in West Palm Beach for Criminal Defense: White-Collar. Read More

Upcoming Events

Eric Soller to moderate 33rd Annual Academy of Trial Lawyers Federal Court Program
December 16, 2022
On Friday, December 16, 2022, Pietragallo partner Eric Soller will moderate the 33rd Annual Academy of Trial Lawyers Federal Court Program. Read More
Tama Beth Kudman to present at National Association of Criminal Defense Lawyers’ Advanced Criminal Law Seminar
January 23, 2023
Pietragallo partner Tama Beth Kudman will be presenting at the National Association of Criminal Defense Lawyers’ (NACDL) Advanced Criminal Law Seminar. Read More
View More News & Events