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United States v. Katakis

United States Court of Appeals, Ninth Circuit

August 31, 2015

UNITED STATES OF AMERICA, Plaintiff-Appellant,
v.
ANDREW B. KATAKIS, Defendant-Appellee

May 15, 2015, Argued and Submitted, San Francisco, California

Appeal from the United States District Court for the Eastern District of California. D.C. No. 2:11-cr-00511-WBS-2. William B. Shubb, Senior District Judge, Presiding.

AFFIRMED.

SUMMARY[**]

Criminal Law

The panel affirmed the district court's order granting Andrew Katakis a judgment of acquittal after a jury convicted him of obstruction of justice, in violation of 18 U.S.C. § 1519, in a case in which Katakis, after learning that federal authorities had subpoenaed his bank records in connection with an investigation into a scheme to rig bids at foreclosure auctions, installed onto his home computer a program designed to wipe hard drives clean of all information.

The panel affirmed because the evidence was insufficient to show that Katakis actually deleted electronic records or files, and because proving that Katakis moved emails from an email client's inbox to the deleted items folder does not demonstrate Katakis actually concealed those emails within the meaning of § 1519.

Adam D. Chandler (argued), Attorney; William J. Baer, Assistant Attorney General; Brent Snyder, Deputy Assistant Attorney General; Anna Tryon Pletcher, Tai S. Milder, May Lee Heye, Kelsey C. Linnett, Kristen C. Limarzi, and James Joseph Fredricks, Attorneys, United States Department of Justice, Antitrust Division, Washington, D.C., for Plaintiff-Appellant.

Elliot R. Peters (argued), Steven A. Hirsch, Jennifer A. Huber, and Elizabeth K. McCloskey, Keker & Van Nest LLP, San Francisco, California, for Defendant-Appellee.

Before: Marsha S. Berzon and N. Randy Smith, Circuit Judges and Raner C. Collins,[*] Chief District Judge.

OPINION

N.R. SMITH, Circuit Judge.

The Government appeals the district court's order granting Katakis's Fed. R. Crim. P. 29 motion. The district court vacated Katakis's conviction and entered a judgment of acquittal, holding that the evidence was insufficient to support the jury's verdict. The Government's theory of liability collapsed during trial, and the Government now raises several alternative theories to try and rescue the conviction. The evidence was insufficient to show that Katakis actually deleted electronic records or files. Further, proving Katakis moved emails from an email client's inbox to the deleted items folder does not demonstrate Katakis actually concealed those emails within the meaning of § 1519. We affirm.

BACKGROUND

This case arises from an investigation by federal authorities into a scheme to rig bids at foreclosure auctions in 2008 and 2009. By 2010, the investigation focused on Andrew Katakis as one of the primary real estate investors helming the conspiracy. On September 1, 2010, Katakis received a letter from his bank informing him that federal investigators had subpoenaed his bank records. On September 3, 2010, Katakis purchased, downloaded, and installed a program called DriveScrubber 3 (" DriveScrubber" ) onto his home computer, a Dell (" Katakis's Dell" ). DriveScrubber is a program designed to wipe hard drives clean of all information. DriveScrubber may be used to overwrite all of the information in a hard drive's unallocated or " free" space. Free space is the portion of the hard drive that is not allocated for the use of the computer's programs or operating system; items that are deleted by a user may " fall" into the free space. There, the deleted item is not actually removed from the computer right away; the space it occupies on the hard drive has simply been made available to be overwritten. Instead of waiting for another file to overwrite the deleted file by chance, DriveScrubber actively overwrites all data in the unallocated space of a hard drive, permanently erasing any files that had fallen into the free space. Once a file is overwritten by DriveScrubber, it is impossible to retrieve it.

Katakis's business partner and alleged co-conspirator, Steve Swanger, kept two computers at their office: an ASUS (" Swanger's ASUS" ), and a Dell (" Swanger's Dell" ). Swanger's Dell was used primarily for emailing with Katakis, and Swanger's ASUS was used for general internet searching. On Saturday, September 4, 2010, Katakis summoned Swanger to their business office. Katakis told Swanger that he wanted to install a " scrubber program" on their computers and that there was " nothing wrong with us cleaning our computers." Swanger observed Katakis use Swanger's ASUS and perform a search for emails involving members of the bid-rigging conspiracy. At 4:40 pm, Katakis installed DriveScrubber on the Swanger ASUS. This copy of DriveScrubber was different from the one installed on Katakis's Dell.[1] Swanger did not observe any deletions on the ASUS; he only observed Katakis " clicking and moving things around."

Katakis then moved to Swanger's Dell and installed DriveScrubber at 4:47 pm. The Swanger Dell had 4,000 emails on it, as Swanger was not in the habit of regularly deleting his emails. Swanger kept hard copies of some important emails, because he feared Katakis might try and wipe clean the hard drives some day. Swanger observed Katakis checking boxes on various emails and unchecking those emails that Katakis believed that Swanger needed. Katakis gave up sorting the emails after about five minutes and pressed the delete key. After seeing that it would take a long time for the emails to be deleted, Katakis went home. When he returned to the office on Monday, Swanger noticed that almost all of the emails on his Dell had been deleted from his email inbox.

At 5:37 pm on September 4, 2010, the same copy of DriveScrubber that was installed on Katakis's Dell was installed on the office's mail server (" GD Mail Server" ). The server managed all email sent or received in the office through the Microsoft Outlook program. The GD Mail Server was operated by a program called Exchange. Katakis had the authority to install ...


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