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United States v. Kim

United States District Court, D. Columbia.

May 8, 2015

UNITED STATES OF AMERICA
v.
JAE SHIK KIM, KARHAM ENG. CORP., Defendants

For JAE SHIK KIM, KARHAM ENG. CORP., Defendants: David B. Deitch, LEAD ATTORNEY, IFRAH, PLLC, Washington, DC.

For USA, Plaintiff: Frederick Walton Yette, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, Criminal Division, Washington, DC; Michael Justin Friedman, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, Washington, DC.

MEMORANDUM OPINION AND ORDER

AMY BERMAN JACKSON, United States District Judge.

In this case involving the enforcement of export control laws and the trade embargo with Iran, defendant Jae Shik Kim has moved to suppress the evidence the United States harvested from a laptop computer it seized from him when he was departing the country through Los Angeles International Airport. Kim is a Korean businessman with business operations in both Korea and California, and in October of 2012, investigators with the Department of Homeland Security obtained information that he was involved in a previous shipment of controlled articles to a Chinese businessman in Korea, who then forwarded them to customers in Iran. The Special Agent handling the investigation decided to search Kim's laptop computer for evidence the next time Kim came to the United States, and in December 2012, he obtained the computer from Kim before permitting him to board his flight home. The next day, the laptop was shipped to an agency forensic specialist in San Diego, who created an identical copy of the hard drive, which was then searched using specialized software and a list of keywords. The thousands of files that were extracted from the keyword search were then burned onto a DVD and returned to the case agent for further review.

After incriminating emails were uncovered through that process, the agent sought and obtained a warrant based upon the content of the emails to conduct the search of the hard drive that had already been completed and to seize the emails that had already been reviewed. Those emails now form a part of the basis of this prosecution, and Kim moves to suppress that evidence, arguing that his rights under the Fourth Amendment of the Constitution have been violated.

The government points to its plenary authority to conduct warrantless searches at the border. It posits that a laptop computer is simply a " container" that was examined pursuant to this authority, and it submits that the government's unfettered right to search cargo at the border to protect the homeland is the beginning and end of the matter.

But to apply those principles under the facts of this case would mean that the border search doctrine has no borders. The search of the laptop began well after Kim had already departed, and it was conducted approximately 150 miles away from the airport. The government engaged in an extensive examination of the entire contents of Kim's hard drive after it had already been secured, and it accorded itself unlimited time to do so. There was little or no reason to suspect that criminal activity was afoot at the time Kim was about to cross the border, and there was little about this search -- neither its location nor its scope and duration -- that resembled a routine search at the border. The fundamental inquiry required under the Fourth Amendment is whether the invasion of the defendant's right to privacy in his papers and effects was reasonable under the totality of the circumstances, and the Court finds that it was not.

PROCEDURAL HISTORY

On March 28, 2013, Kim and his company, Karham Eng. Corp. (" Karham" ), were indicted for violations of a number of statutes, including the International Emergency Economic Powers Act (" IEEPA" ), 50 U.S.C. § § 1701 et. seq., the Arms Export Control Act (" AECA" ), 22 U.S.C. § 2778, and the International Traffic in Arms Regulation (" ITAR" ), 22 C.F.R. pts. 120-30. Indictment [Dkt. #1]. These laws and regulations govern economic sanctions imposed by the United States against certain countries, such as Iran, and the export of certain " defense articles" from the United States. The United States alleges that from around December 2007 through March 2010, defendants conspired to export defense articles without the required export licenses for sale to intermediaries in China and Korea and ultimate customers in Iran. Indictment ¶ 17. The defense articles at issue -- six Q-Flex Accelerometers, Models QA-2000-10, QA-2000-20, or QA-3000 -- are aircraft parts manufactured by Honeywell Aerospace which are used in aircraft and missile navigation systems. Indictment ¶ ¶ 3, 16(1), 17(3). They appear on the export control list, and an export license is required before they may be exported legally from the United States. 22 U.S.C. § 2778(b)(2); 22 C.F.R. pt. 123.1(a).

On March 2, 2015, defendants filed the instant motion to suppress. Defs.' Mot to Suppress Evidence [Dkt. # 35] (" Defs.' Mot." ). The parties briefed the motion, Gov't's Opp. to Defs.' Mot. [Dkt. # 37] (" Gov't Opp." ); Defs.' Reply in Supp. of Defs.' Mot. [Dkt. # 38] (" Defs.' Reply" ), and the Court held an evidentiary hearing on April 7 and 8, 2015, at which the following facts were established.

FACTUAL BACKGROUND

A. The Government's Investigation of Bin Yang

In 2011, Special Agent Kevin Hamako of the Department of Homeland Security (" DHS" ) Homeland Security Investigations office was investigating a Chinese national, Bin Yang, also known as Raymond Yang, for export control violations, specifically the unlawful export of accelerometers to China and Iran. Mots. Hr'g Tr., April 7, 2015 (" 4/7 Tr." ) at 7. As part of the investigation, Special Agent Hamako worked with an undercover agent who communicated with Yang by email and telephone. 4/7 Tr. at 14.

On April 1, 2011, Yang sent the undercover agent an email asking to obtain Honeywell QA-3000-30's from him, and he offered: " Because my uncle has a sudden schedule to USA, he may could meet you and pay you." Report of Investigation, No. 107, May 20, 2011, Gov't Ex. 3 (" May 2011 ROI" ) at 3.

On April 4, 2011, Yang sent the undercover agent another email stating, " My uncle just has his sudden trip to US, he may meet you and only see the goods and maybe pay you." May 2011 ROI at 3.

In an April 5, 2011 telephone conversation between Yang and the undercover agent, Yang again volunteered that he had a contact who would be traveling to the United States who could inspect the QA-3000 accelerometers that Yang hoped to buy. May 2011 ROI at 3; 4/7 Tr. at 15-16. Yang proposed to have his " uncle" travel to the United States, inspect the accelerometers, and provide payment for them. 4/7 Tr. at 15-16. He also stated he did not want his " uncle" to physically carry the items out of the country because he was afraid that U.S. customs officials would discover them. 4/7 Tr. at 16; see also Report of Investigation, No. 114, Jun. 22, 2011, Gov't Ex. 2 (" Jun. 2011 ROI" ) at 3 (detailing information about the April 5, 2011 telephone call). At that point, the unidentified " uncle" became a further subject of the investigation. 4/7 Tr. at 16.

On April 27, 2011, Special Agent Hamako obtained and executed a warrant to search and seize Yang's emails, and on May 12, 2011, he received the emails. May 2011 ROI at 3; see also 4/7 Tr. at 17. The emails included several communications with " Uncle Kim" at JS@karham.co.kr:

o an email dated June 24, 2010 from Yang to Kim that stated, " There is an inquiry from a domestic client for Honeywell products. It is not for military application and I confirm the end user is not Iranian," to which Kim responded on the same day, " Thanks! Raymond, I will also check the Honeywell parts whether [w]e can buy them."
o emails between Yang and Kim from July 2010 relating to the purchase of various items not subject to export controls
o an email from almost a year later, dated March 28, 2011, in which Yang asked Kim if he could identify a source for other parts that are not subject to controls: " Dear Uncle Kim Hi. I have the inquiry for Honeywell QAT 185/160 model, about 150pcs for each model per year. 3pcs is a completed unit. First trial order, the client will buy 9pcs for each model as a start. Do you have any good sources to supply them." On the same date, Kim responded, " Now, Mr Ji are checking it with our USA office. And also, Tomorrow, I will go to USA with Mr.Ji and stopped in USA office. We will check it again and feed back you soon."
o an email from Yang to Kim dated April 1, 2011, stating: " I see that you will go to U.S.A, it is very good. For your reference, I get a message that there is supplier could supply us some stocks of QA3000. But I don't have successful business with him before, but we could buy his goods if his stocks are ok. Dear Uncle Kim, can you please have a check if you agree. We could pay you, so you can buy it in USA. . . . QAT 185 and 160 are not sensitive products, and if you can supply, we could buy from you, and there is no worry to pay the deposit, because I trust my uncle."

May 2011 ROI at 4-6.

On April 5, 2011, Yang had the recorded telephone call with the undercover agent described above in which he proposed that his " uncle" could inspect the parts Yang hoped to buy. As of May 2011, though, the agents were aware that Yang's inquiry to Kim had borne no fruit and the undercover operation was over. 4/7 Tr. at 72 (stating the agents knew " fairly soon after, within maybe a couple of weeks" that the operation was not going ahead).

B. The Identification of " Uncle Kim" and his Companies

On June 21, 2011, Special Agent Hamako was able to identify " Uncle Kim" as defendant Jae Shik Kim by searching a government database for the JS@karham.co.kr email address. 4/7 Tr. at 21-22; Jun. 2011 ROI at 3-4. The email address appeared in U.S. State Department records on a non-immigrant visa application submitted by Kim. 4/7 Tr. at 21-22; Jun. 2011 ROI at 3. The application provided Special Agent Hamako with other information about Kim, including his date of birth, passport number, and nationality. Jun. 2011 ROI at 3-4; 4/7 Tr. at 22.

From the visa application, Special Agent Hamako also determined that Kim was president of corporate defendant Karham. 4/7 Tr. at 22. Through further research, he learned that Karham was located in South Korea and Stevenson Ranch, California, and that Karham shared its Stevenson Ranch, California address with a company called Apex Components. 4/7 Tr. at 22-23; see also Jun. 2011 ROI at 3-5 (providing information about the identification of Kim).

Special Agent Hamako researched Karham and Apex Components and found that Karham was involved in the export and sale of equipment used in the oil industry and petrochemical industries, including types of meters. 4/7 Tr. at 24. On a web-based government database, Special Agent Hamako found approximately thirty-nine shipper's export declarations (" SEDs" ) from Karham for the export of meters from the United States to Australia and South Korea. 4/7 Tr. at 24. He found eight shipper's export declarations from Apex Components, which also showed exports of various industrial equipment from the United States to South Korea. 4/7 Tr. at 25.

Finally, Special Agent Hamako found travel records showing that defendant Kim arrived in Los Angeles International Airport (" LAX" ) on April 2, 2011, and departed LAX for Narita, Japan on April 14, 2011. Jun. 2011 ROI at 4; see also 4/7 Tr. at 26.

C. Yang's Arrest and Debrief

Early the following year, in January 2012, Yang was arrested and, in May 2012, he was extradited from Bulgaria to the United States. 4/7 Tr. at 9. He agreed to be debriefed by U.S. authorities in an effort to ameliorate his sentence. 4/7 Tr. at 9; see also Search Warrant, Ex. B to Defs.' Mot. [Dkt. # 35-2] (" Search Warrant" ); Aff. in Supp. of Appl. for Search Warrant, Ex. B to Defs.' Mot. [Dkt. # 35-2] (" S.W. Aff." ), at 7 n.1.

On October 18, 2012, Special Agent Hamako interviewed Yang. 4/7 Tr. at 9; see also Report of Investigation No. 146, Nov. 15, 2012, Gov't Ex. 1 (" Nov. 2012 ROI" ) at 3-5 (reporting results of the Yang debrief). Yang told investigators that at some point in 2008 or 2009, he purchased six QA-2000 accelerometers from Kim, which were shipped to him in China without an export license. 4/7 Tr. at 10. Yang said that once he received the accelerometers, two of his Iranian customers traveled from Iran to China to receive them directly. Id. Yang told Special Agent Hamako that Kim purchased the accelerometers through his connections in the United States, and they were shipped from the United States to China. 4/7 Tr. at 11; Nov. 2012 ROI at 3. While this is not reflected in the report of the interview, Special Agent Hamako testified that Yang also told him that Kim knew the accelerometers were destined for customers in Iran. 4/7 Tr. at 11.

As a result of the Yang interview, Special Agent Hamako decided to conduct what he characterized as a border search of Kim's electronic devices " as he was leaving the U.S. on his next travel." 4/7 Tr. at 110.

I wanted to know when [Kim] was returning to further my investigation in the sense that I wanted to be ready to conduct more proactive steps if he was in the U.S.; specifically, to include a border search, surveillance, or other activities to determine if he was engaged in any potential criminal activity while in the United States.

4/7 Tr. at 33. At that time, it was the agent's understanding that no suspicion was required to conduct a border search of any items Kim might be carrying, including electronic devices. 4/7 Tr. at 32.

Because of the ongoing investigation, Kim's name was in DHS's case management system, which meant Special Agent Hamako would receive an automatic email if Kim was booked on a flight to or from the United States. 4/7 Tr. at 32-33. Some time later, the agent received an email notifying him that Kim was going to return to the United States in November 2012, and that he would be departing LAX for South Korea on December 5, 2012. 4/7 Tr. at 33.

D. The December 5, 2012 Search of Kim

Special Agent Hamako testified that while he understood that he had the authority to conduct a border search of Kim without any level of suspicion that Kim was engaged in criminal activity, 4/7 Tr. at 34, he had grounds for that suspicion in any event.

At that time my suspicion was based on the debriefing of Yang in which Yang stated he had previously successfully procured ITAR controlled accelerometers from Mr. Kim, as well as the fact that Mr. Kim's company appeared to be engaging in exports from the U.S. to South Korea and other foreign locations, as well as the fact that, more recently, Mr. Yang had asked Mr. Kim to view products in the U.S., inspect them and pay for them.

4/7 Tr. at 35. Special Agent Hamako stated that although he knew Yang was incarcerated, he " wasn't sure if Mr. Kim was in contact with other individuals who might be seeking to illegally procure U.S. goods," and that his goal was to ascertain whether Kim had other customers. 4/7 Tr. at 35-36. Under questioning by the prosecutor at the hearing, the agent agreed that he also thought it was reasonable to believe that records of the 2008 transactions, including emails, could still be saved on the computer. 4/7 Tr. at 38-39.

Special Agent Hamako said he intended to conduct a border search of Kim as he departed the country rather than as he entered the country,

because if I believed at that time that he was traveling to the U.S. and might be conducting criminal activity while he was in the U.S., such as procuring products or attempting to set up subsequent deals, I would want to capture that information after he had done so, rather than before he had conducted any such activity. So, conducting a border search on the inbound side could cause him to decide not to conduct whatever activities or operations he might have been planning. Whereas, conducting the border search as he was leaving, in our view, would be more likely to obtain evidence of any criminal activity he had conducted during his trip.

4/7 Tr. at 34-35. He added that based on Yang's statements and Karham's general business activities, he was " concerned that [Kim] could be involved in further activity in the [S]tates regarding illegal exports." 4/7 Tr. at 39. But he testified that he did not know at the time -- and he does not know now -- what Kim did while he was in the United States between November 25 and December 5, 2012, and that he did not conduct any surveillance or take any steps to find out before carrying out his plan to obtain the laptop. 4/7 Tr. at 81.

On December 5, 2012, working with a LAX duty agent and Customs and Border Protection officers, Special Agent Hamako conducted the planned search of Kim as he departed the country. 4/7 Tr. at 40. First, he searched Kim's checked luggage, which was located behind the check-in counter with Korean Airlines. Id. He found no accelerometers or contraband. 4/7 Tr. at 82-83. He did find a small plastic bag containing plastic o-rings, some unidentified industrial metal objects, and some product brochures. 4/7 Tr. at 40-41, 90. The agent was not able to identify the applications of these particular o-rings because he was not an aircraft parts expert, but said that he knew " in other cases the Iranian Air Force had been seeking o-rings for their aircraft," and so he thought that these small plastic ones " could be" on the munitions list, and he kept them to determine their application. 4/7 Tr. at 41-42. He later spoke with the manufacturer, and determined " it was very unlikely that they were export controlled items," and shipped them back to Kim. 4/7 Tr. at 43. Special Agent Hamako also testified that the metal objects in the luggage did not appear to have any moving parts or sensors or ...


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