This is the completion of a two-part post on the application of wiretapping to the investigation of suspected white-collar crime. As we outlined in our earlier post two weeks ago, federal authorities are increasingly expanding the use of wiretaps to activities for which such tactics were formerly considered beyond the pale.
After all, historically wiretaps were justified only in very limited cases. The investigation of organized crime and terrorist threats were virtually the only exceptions to the rule that listening to someone's phone conversations without a warrant was prohibited by the Fourth Amendment.
But in the St. Louis area and across the nation, there is now considerable concern that wiretaps are being authorized in more and more cases that have little or nothing to do with combating violent crime or terrorism.
When did the landscape start changing regarding the application of wiretaps to the investigation of financial crime? It is not difficult to point to a specific case: the investigation by the Securities and Exchange Commission (SEC) into the activities of a New York hedge fund called the Galleon Group.
As the net worth of the firm's founder skyrocketed, the SEC suspected insider trading. But despite a plethora of subpoenas and document reviews, the investigation turned up little evidence to support criminal charges.
At that point, in 2008, the government asked a federal judge for authorization to intercept calls on the cellphone used by the Galleon Group's founder, Raj Rajaratnam. Authorities listened to an astonishing number of calls over a nine-month period.
Using information taken from these wiretaps, federal prosecutors charged Rajaratnam with insider trading. He was convicted and sentenced to 11 years in prison, though that conviction is now on appeal.
Source: Forbes, "Once Reserved For Drug Crimes, Wiretapping Takes Center Stage in White Collar Prosecutions," Jordan Maglich, May 21, 2013