Legal fight festers over secret recordings

A federal judge in San Francisco has barred the use of secret recordings made by FBI agents without a warrant in front of the San Mateo County courthouse during auctions of foreclosed properties in 2009 and 2010.

U.S. District Judge Charles Breyer issued the ruling Monday in a case in which five real estate investors are charged with rigging bids and carrying out mail fraud in connection with the auctions.

Breyer said the five men had a reasonable expectation of privacy when they talked in front of the courthouse in Redwood City.

In addition, Breyer wrote, other people, including court staff, were recorded without their knowledge:

“The government has utterly failed to justify a warrantless electronic surveillance program that recorded private conversations spoken in hushed tones by judges, attorneys and court staff entering and exiting a courthouse.”

The case of the five investors is part of a nationwide probe in which prosecutors in the U.S. Department of Justice’s Antitrust Division are investigating bid rigging at foreclosed-property auctions in Northern California, Georgia, Alabama and North Carolina.

More than 100 people have been charged thus far. In the California cases, which center on auctions in San Francisco, San Mateo, Alameda and Contra Costa counties, more than 50 defendants have pleaded guilty.

The small recorders used in front of the San Mateo County courthouse were placed in a sprinkler box, a planter box, two unmarked police cars and a backpack, Breyer wrote.

The defendants in that case are Joseph Giraudo, Raymond Grinsell, Kevin Cullinane, James Appenrodt and Abraham Farag.

Breyer will hold a hearing on Aug. 10 to consider to what extent the now-banned recordings may have tainted the remainder of the case against the five men. A trial date has not been set.

In another case concerning four other men who participated in auctions in front of the Alameda and Contra Costa county courthouses, a different federal judge reached the opposite conclusion last week about FBI recordings made in those locations in 2010.

U.S. District Judge Phyllis Hamilton of Oakland said on July 25 that the defendants in that case had no expectation of privacy in those public areas, especially because the recorders picked up only “voices in conversational or loud tones, and not hushed or whispered voices.”

The trial in that case is scheduled to begin Sept. 19.