United States v. Frank Capozzi ( 2022 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 20-2953
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UNITED STATES OF AMERICA
v.
FRANK J. CAPOZZI,
Appellant
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
(D.C. No. 3-16-cr-00347-001)
District Judge: Honorable Robert D. Mariani
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Submitted Under Third Circuit L.A.R. 34.1(a)
December 13, 2021
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Before: GREENAWAY, JR., KRAUSE, and PHIPPS, Circuit Judges.
(Opinion Filed: April 1, 2022)
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OPINION*
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GREENAWAY, JR., Circuit Judge.
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Defendant-appellant Frank J. Capozzi appeals from his judgment of conviction,
arguing that the fruits of a search conducted pursuant to a search warrant should be
suppressed. Because we conclude that the magistrate had a substantial basis for
concluding that probable cause existed to issue the warrant, we will affirm the judgment
of conviction.
I. BACKGROUND
Capozzi first came to law enforcement’s attention in November 2011, when
Allstate Insurance contacted Pennsylvania’s Office of the Attorney General (OAG) with
its suspicions that Capozzi had submitted fraudulent claims under a disability insurance
policy. Allstate suspected that Capozzi, who claimed to be disabled and unable to work,
was never employed at the company he had reported working for—Hindi Beginnings,
Inc. The OAG’s investigation uncovered that no employer had reported wages from
Hindi Beginnings to Capozzi and that Capozzi in fact had received unemployment
benefits from the Commonwealth during 2011.1
Based on these findings, OAG agents investigated addresses connected to Hindi
Beginnings, including a residence at 465 South Franklin Street in Wilkes-Barre. Through
interviews with Capozzi, Krisandra Strausser, and Robert Monaco, OAG agents
discovered that Strausser and Monaco submitted fraudulent documents to Allstate,
attesting to be executives at Hindi Beginnings, in furtherance of Capozzi’s disability
1
Eligibility for unemployment benefits was, at the time, only available to those willing
and able to work, and who were actively seeking employment. This, of course, is
incompatible with disability insurance claim.
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insurance claim. In April 2013, OAG agents executed arrest warrants against Capozzi,
Strausser, and Monaco in connection with the insurance fraud investigation. In June
2013, Capozzi shared, through his attorney, certain corporate and personal financial
documents indicating that Hindi Beginnings was a functioning corporation and that
Capozzi had received $8,999.00 in compensation from the company during 2011.
OAG Special Agent Douglas Hilyard, curious as to why Capozzi would report
such a low-income figure to the IRS, reached out to Special Agent Erik Veder, an agent
of the IRS apparently located in North Carolina. Agent Veder reported that one common
scheme was to report income on federal tax returns to maximize tax return credits.
In July 2013, after Capozzi’s arrest, OAG agents sought a search warrant from a
Commonwealth magistrate for the Wilkes-Barre property connected to Hindi Beginnings.
The search warrant sought a variety of documents pertaining to the operations of Hindi
Beginnings in 2011, in whatever medium those documents might be stored. The warrant
was for the entire Wilkes-Barre property in which Hindi Beginnings business was
purportedly conducted.
The searches uncovered several thumb drives, from which the OAG forensically
extracted data. Agent Hilyard’s review of the drives revealed files listing tax clients and
tax returns. Those individuals referenced in these files as tax clients appeared to be
federal prisoners, who were not earning incomes or receiving tax refunds. The OAG
subsequently shared the information it recovered with the IRS Office for the Middle
District of Pennsylvania. Other documents recovered in the search were used in the
Commonwealth’s prosecution of Capozzi.
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A Grand Jury returned an indictment charging Capozzi with one count of
conspiracy to defraud the Government, 18 U.S.C. § 286 (Count One), five counts of wire
fraud, 18 U.S.C. § 1343 (Counts Two – Six); five counts of Aggravated Identity Theft, 18
U.S.C. § 1028A (Counts Seven – Eleven); and four counts of theft of Government
money, property, or records, 18 U.S.C. § 641 (Counts Twelve – Fifteen). Capozzi
unsuccessfully moved to suppress the fruits of the OAG’s search of his home. Capozzi
subsequently pleaded guilty to Count One and Count Seven, and the remaining charges
were dismissed by the Government. On September 14, 2020, the District Court entered
its judgment of conviction against Capozzi, sentenced him to a term of 46 months’
imprisonment on Count One and a term of 24 months’ imprisonment on Count Seven, to
run consecutively, for an aggregate sentence of 70 months’ imprisonment.
Capozzi now appeals, renewing his suppression arguments. We agree with the
District Court that the warrant issued for the search of the Wilkes-Barre property
complied with the Fourth Amendment and will affirm the judgment of conviction.
II. JURISDICTION AND STANDARD OF REVIEW
The District Court had jurisdiction pursuant to 18 U.S.C. § 3231. We have
jurisdiction pursuant to 28 U.S.C. § 1291. “Our review of the denial of a motion to
suppress is for clear error as to the District Court’s findings of fact, and plenary as to
legal conclusions in light of those facts.” United States v. Williams, 974 F.3d 320, 350
(3d Cir. 2020) (quoting United States v. Hester, 910 F.3d 78, 84 (3d Cir. 2018)). In the
context of evaluating a warrant, we exercise plenary review over the District Court’s
evaluation of the issuing magistrate’s probable cause determination and conduct a
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deferential review of the initial probable cause determination. United States v. Stearn,
597 F.3d 540, 554 (3d Cir. 2010). Our role is solely to evaluate whether “the magistrate
had a substantial basis for concluding that probable cause existed.” Id. (quoting Illinois
v. Gates, 462 U.S. 213, 238 (1983)); see also United States v. Desu, 23 F.4th 224, 235
(3d Cir. 2022).
III. DISCUSSION
The Fourth Amendment provides that “no Warrants shall issue, but upon probable
cause, supported by Oath or affirmation, and particularly describing the place to be
searched, and the persons or things to be seized.” U.S. Const. amend. IV. Probable
cause exists where “there is a fair probability that contraband or evidence of a crime will
be found in a particular place.” Gates, 462 U.S. at 238. “The warrant must also describe
the things to be seized with sufficient particularity and be ‘no broader than the probable
cause on which it is based.’” United States v. Zimmerman, 277 F.3d 426, 432 (3d Cir.
2002) (quoting United States v. Weber, 923 F.2d 1338, 1342 (9th Cir. 1991)).
Because we cannot determine that the issuing magistrate did not have a substantial
basis for concluding that probable cause existed to search the whole of the Wilkes-Barre
property, we will affirm the judgment of conviction.
Capozzi argues that the warrant was invalid because the search was pretextual in
nature, failed to state with specificity the items sought and the places to be searched, and
the search itself was not limited in scope to the places or items inside the property where
documents related to Hindi Beginnings would be found. Capozzi proposes that, as a
result of OAG’s inquiry to Agent Veder, this Court should apply the Commonwealth’s
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search and seizure jurisprudence in evaluating the admissibility of the recovered
documents. In federal court, however, “evidence obtained in accordance with federal law
is admissible.” United States v. Rickus, 737 F.2d 360, 363 (3d Cir. 1984). Our test for
determining the admissibility of evidence recovered from a search “is one of federal law,
neither enlarged by what one state court may have countenanced, nor diminished by what
another may have colorably suppressed.” Elkins v. United States, 364 U.S. 206, 224
(1960); see also United States v. Laville, 480 F.3d 187, 193 (3d Cir. 2007).
With that in mind, the warrant issued here was clearly supported by probable
cause. Capozzi suggests that the length of the investigation and earlier provision of
documents to the OAG undermined any suggestion of probable cause. However, OAG’s
investigation to that point had uncovered evidence of at least two concurrent fraud
schemes. First, there was the simultaneous collection of a disability insurance policy
from Allstate and unemployment benefits from the Commonwealth. Second, Capozzi’s
own records raised the possibility of fraudulent tax filings or failure to appropriately file
taxes. It was reasonable for the OAG to expect to find additional documents establishing
that Hindi Beginnings did not conduct any real business and that Capozzi did not receive
any salary, notwithstanding Capozzi’s earlier provision of documents. At the very least,
such a search was reasonable to assure the veracity of the documents provided.
Moreover, OAG’s investigation (and public records) clearly identified the Wilkes-
Barre address as Hindi Beginnings’s headquarters. Although Capozzi complains that the
warrant was too broad in permitting the search of the entire property and any medium in
which financial records may have been kept, he offers no cogent limiting principle that
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should have narrowed this warrant. Tellingly, he neither suggests a clear line of
demarcation between the living space and office space for Hindi Beginnings, nor any
reason some electronic devices in the home were amenable to search but others were not.
Although the warrant sought all documents pertaining to the operation of Hindi
Beginnings for the tax and business year of 2011, that alone is insufficient to conclude
that the search was overbroad. See United States v. Fattah, 858 F.3d 801, 819-20 (3d Cir.
2017) (concluding warrant authorizing seizure of “[a]ll financial records” and “[a]ll tax
records,” among other things, satisfied the particularity requirement). Our review of the
record certainly reveals there was a “fair probability” that incriminating financial
documents could have been found throughout the property. See Gates, 462 U.S. at 238;
Zimmerman, 277 F.3d at 432.2
IV. CONCLUSION
Accordingly, we will affirm the judgment of conviction.
2
Because we conclude that there was a substantial basis for the magistrate’s probable
cause determination, we need not reach the question of whether the OAG executed the
warrant in good faith reliance upon its validity. See United States v. Leon, 468 U.S. 897,
924-25 (1984); Pearson v. Callahan, 555 U.S. 223, 241-42 (2009) (recognizing that Leon
created an analytical framework in which “a defendant challenging a search will lose if
either: (1) the warrant issued was supported by probable cause; or (2) it was not, but the
officers executing it reasonably believed that it was”).
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