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United States District Court Southern District of New York Case 1:15-cr-00611-AJN Document 45 Filed 05/27/16 Page 1 of 105 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK UNITED STATES OF AMERICA, v. Crim. Action No.: 15-CR-00611 (AJN) BENJAMIN WEY and SEREF DOĞAN ERBEK, Defendants. MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT BENJAMIN WEY’S MOTION TO SUPPRESS, TO DISMISS THE INDICTMENT, AND FOR OTHER RELIEF HAYNES AND BOONE, LLP 30 Rockefeller Plaza New York, New York 10012 (212) 659-7300 Attorneys for Defendant Benjamin Wey 15742826_10 Case 1:15-cr-00611-AJN Document 45 Filed 05/27/16 Page 2 of 105 TABLE OF CONTENTS Page PRELIMINARY STATEMENT .................................................................................................... 1 STATEMENT OF FACTS ............................................................................................................. 6 1. Background ................................................................................................................. 6 A. Mr. Wey’s Personal, Educational and Professional Background ................... 6 B. Formation of the NYGG Brand ...................................................................... 7 C. The Rise of the Chinese Economy and NYGG’s Business ............................ 8 D. SmartHeat, Inc., Deer Consumer Products, Inc., and CleanTech Innovations, Inc. ............................................................................................. 9 E. The Investigation Begins, and the Search of the NYGG Office .................. 10 2. The Investigation ...................................................................................................... 10 A. The Application and Supporting Affidavit to Search The NYGG Office .... 10 (1) Probable Cause .................................................................................. 10 (2) Specifying documents to be seized .................................................... 17 B. The Warrant to Search The NYGG Office ................................................... 20 C. The Execution of the Search of the NYGG Office ....................................... 21 D. The Apartment Search Warrant and Supporting Affidavit ........................... 21 E. The Execution of the Search of the Apartment ............................................ 23 F. After The Searches ....................................................................................... 24 3. The Indictment and Surrounding Publicity ............................................................... 25 ARGUMENT ................................................................................................................................ 27 I. THE SEARCH WARRANTS ARE OVERLY BROAD AND UNREASONABLE “GENERAL WARRANTS” .............................................................................................. 27 A. Fourth Amendment Requirements ............................................................................ 28 B. The Warrants Fail to Describe with Particularity the Items To Be Seized ............... 30 15742826_10 i Case 1:15-cr-00611-AJN Document 45 Filed 05/27/16 Page 3 of 105 C. The Lists of Items To Be Seized Are Overbroad and Lack Probable Cause ............ 35 II. NO PROBABLE CAUSE EXISTED TO SUPPORT THE WARRANTS, BECAUSE THE SUPPORTING AFFIDAVIT WAS MATERIALLY MISLEADING ...................... 37 A. NASDAQ Was Not Defrauded Regarding Issuers’ Listing Qualifications .............. 39 B. Agent Komar’s Claims of Market Manipulation Are Misleading ............................ 43 (1) Deer and SmartHeat’s Stock Price Rise is Not “Unexplained” ................... 43 (2) Agent Komar’s Selective and Misleading Assertions of Manipulation ....... 46 C. No Currency Transaction Reporting Requirements Were Evaded ........................... 48 D. Other Portions of Agent Komar’s Affidavit Fail to Establish Probable Cause to Search. ...................................................................................................................... 49 E. At the Very Least, The Court Should Hold a Hearing Pursuant to Franks v. Delaware .................................................................................................................. 51 III. THE GOVERNMENT’S FOUR-YEAR RETENTION OF NEARLY EVERY FILE SEIZED CONSTITUTES AN UNREASONABLE SEARCH AND SEIZURE IN VIOLATION OF MR. WEY’S FOURTH AMENDMENT RIGHTS............................... 53 IV. THE GOVERNMENT SHOULD BE COMPELLED TO DISCLOSE ITS TAINT PROCESS, AND SHOULD BE PROHIBITED FROM REVIEWING PRIVILEGED OR POTENTIALLY PRIVILEGED DOCUMENTS .............................................................. 59 V. THE CHARGES SHOULD BE DISMISSED ................................................................... 63 A. Counts One, Two, Three, Four, Seven, and Eight are Duplicitous........................... 64 B. Counts Two Through Six Must be Dismissed .......................................................... 67 (1) Count Two Fails to Allege any Deceptive Act ............................................. 68 (2) Count Three Fails to State an Offense .......................................................... 70 (3) Count Four Should Be Dismissed For Failure to Allege Wire Fraud .......... 73 (4) Counts Five and Six Should Be Dismissed Because the Indictment Fails to Allege Willfulness ........................................................................... 73 C. Counts One, Seven and Eight Also Fail.................................................................... 76 D. The Government’s Prejudicial Pre-Indictment Delay Requires Dismissal of the Indictment. ................................................................................................................ 79 15742826_10 ii Case 1:15-cr-00611-AJN Document 45 Filed 05/27/16 Page 4 of 105 VI. MR. WEY SHOULD BE PERMITTED TO TAKE A PRE-TRIAL DEPOSITION OF CO-DEFENDANT SEREF DOĞAN ERBEK PURSUANT TO RULE 15 ...................... 82 A. Mr. Erbek Will Offer Material, Non-Cumulative Exculpatory Testimony Unattainable From Any Other Source ...................................................................... 84 B. Mr. Erbek Is Unavailable to Testify in the United States ......................................... 87 C. Mr. Erbek’s Testimony Is Necessary to Prevent a Failure of Justice ....................... 87 VII. THE INDICTMENT SHOULD BE STRIPPED OF ALL REFERENCES TO MR. WEY’S “A/K/AS” .............................................................................................................. 88 CONCLUSION ............................................................................................................................. 91 15742826_10 iii Case 1:15-cr-00611-AJN Document 45 Filed 05/27/16 Page 5 of 105 TABLE OF AUTHORITIES Page(s) Cases Arizona v. Gant, 556 U.S. 332 (2009) .................................................................................................................28 Bryan v. United States, 524 U.S. 184 (1998) .................................................................................................................74 Calderon v. City of New York, 14-Civ-1082, 2015 WL 5802483 (S.D.N.Y. Oct. 5, 2015)......................................................43 Cheek v. United States, 498 U.S. 192 (1991) .................................................................................................................76 Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930 (2d Cir. 1984).....................................................................................................69 Coolidge v. New Hampshire, 403 U.S. 443 (1971) .................................................................................................................28 Doane v. United States, 08-CR-0017, 2009 WL 1619642 (S.D.N.Y. June 5, 2009) .....................................................54 Doggett v. United States, 505 U.S. 647 (1992) .................................................................................................................81 Franks v. Delaware, 438 U.S. 154 (1978) .....................................................................................................38, 43, 52 Groh v. Ramirez, 540 U.S. 551 (2004) .................................................................................................................32 Herring v. United States, 555 U.S. 135 (2009) .................................................................................................................29 Klitzman v. Krut, 744 F.2d 955 (3d Cir. 1984).....................................................................................................37 Kyloo v. United States, 533 U.S. 27 (2001) ...................................................................................................................54 Maryland v. Garrison, 480 U.S. 79 (1987) ...................................................................................................................28 15742826_10 iv Case 1:15-cr-00611-AJN Document 45 Filed 05/27/16 Page 6 of 105 Russell v. United States, 369 U.S. 749 (1962) .................................................................................................................68 Schurman v. Leonardo, 768 F. Supp. 993 (S.D.N.Y. 1991)...........................................................................................80 In re Search Warrant for Law Offices Executed on March 19, 1992, 153 F.R.D. 55 (S.D.N.Y. 1994) ...............................................................................................62 SEC v. China Energy Savings Technology, No. 06 Cv. 6402 (E.D.N.Y.) ....................................................................................................41
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