Court of Appeals Hears White Collar Crime Case Involving Wiretap

In the high-profile case of hedge fund manager Raj Rajaratnam, who was convicted of insider trading following an investigation by the Securities and Exchange Commission (SEC), judges will decide whether omitting key investigative information is grounds for throwing out evidence from a wiretap.

Federal Wiretap Laws

Federal investigators use wiretaps in both criminal and civil investigations, though their use is more common in criminal cases. Investigators must obtain authorization from a federal judge to use a wiretap. This authorization lies at the heart of Rajaratnam’s appeal.

Federal law states that all use of wiretaps in civil and criminal investigations must be authorized by a judge in the jurisdiction where the wiretap is to be used. To be authorized to use a wiretap, law enforcement must present detailed information regarding when, where and how the wiretap will be used.

When seeking a wiretap authorization, a law enforcement officer must explain why he or she believes the wiretap is necessary, the nature of the offense and who law enforcement believes is committing it, where the wiretap will be used, what will be recorded and how long the wiretap will be in place.

One of the most important things law enforcement must show to have a wiretap authorized is why it is necessary. Wiretaps are more intrusive on an individual’s privacy rights than other investigative techniques, so law enforcement must state why the use of a wiretap is necessary. Usually, this is done by showing that other investigative techniques would not successfully uncover the evidence a wiretap would reveal.

The Rajaratnam Appeals Case

At the heart of the Rajaratnam appeal is whether or not the wiretap used to implicate the defendant was adequately authorized. During the SEC’s civil investigation, it compiled 4 million pages of documents regarding the defendant’s alleged insider trading. However, the authorization of the use of a wiretap in the investigation of Rajaratnam included only a passing reference to the SEC’s sweeping investigation and mentioned that it was unsuccessful in securing evidence.

The federal judge who reviewed the authorization, and who has since stepped down, claimed that the authorization glaringly omitted the extent of the SEC’s investigation. However, he decided to allow the evidence from the wiretap because he believed the wiretap would have been authorized even if law enforcement had given a full description of SEC investigative strategies.

Experts believe that the appellate judges may deliberate on two different points . They may decide to focus on the inherent privacy issues wiretaps present and how the authorization of the wiretap fell short of meeting the standards of necessity. Or, appellate judges could instead focus on how an ongoing investigation could be used as proof that a wiretap is not necessary.

The Rajaratnam appeals case may have implications for future white collar crime investigations. Since the SEC and other investigators can use other methods, such as subpoenas and depositions, to gather evidence, it is possible that the court of appeals may establish a precedent making it more difficult for law enforcement to use privacy-invading techniques like wiretapping for white collar crimes.

To learn more about wiretapping and its use in white collar crime investigations, please contact an experienced criminal defense attorney.