IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

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1 MALCOLM S. SEGAL JAMES P. MAYO SEGAL & KIRBY LLP 770 L Street, Suite 1440 Sacramento, CA Telephone: (916) Facsimile: (916) Attorneys for Defendant FREDERICK SCOTT SALYER IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA UNITED STATES OF AMERICA, Plaintiff, v. FREDERICK SCOTT SALYER, CASE NO: 2:10-CR-0061-LKK DEFENDANT S OBJECTIONS TO MAGISTRATE JUDGE S FINDINGS AND RECOMMENDATIONS Defendant. / INTRODUCTION This Court, by order dated March 8, 2010, referred certain issues relating to the government s motion to set a new motions schedule and a trial date, and the defendant s counter position concerning access and the usefulness of the government s enormous volume of discovery, to Magistrate Judge Hollows for review. Magistrate Judge Hollows directed the defense to provide declarations

2 regarding discovery and set a schedule for a government response. The declarations were filed, a response and a reply followed and an informal hearing was thereafter conducted by Judge Hollows in his court room on March 30, Several days later, on April 5, 2011, the parties and Judge Hollows visited the FBI offices, where hard copies of a portion of the discovery were stored in two stand alone building pods and in three rooms of a separate building contiguous to the FBI offices. On April 18, 2011, Magistrate Judge Hollows issued his Findings and Recommendations. W ith but a few exceptions, the defendant largely agrees with 1 Judge Hollows Findings. He does, however, object to the filed Recommendations and requests that this Court modify them in any future order. In furtherance of that application, the defendant requests an opportunity to provide information to the Court in camera regarding: (1) the defendant s legal representation; (2) his personal financial status; (3) the defendant s intended CJA application for costs and investigative expenses; (4) the defendant s intended defenses in this case; and, (5) the preparation required by the defendant to present his case. In addition, the defendant requests that, rather than adopting Judge Hollows general schedule for motions and trial, the Court s future order Nowhere in his findings does Judge Hollows question the good faith of 1 the defense in seeking time to prepare nor does he do anything but marvel at the enormous volume of perceived evidence the government has collected, the access to which it is now guarding in secure premisses. To the contrary, Judge Hollows notes that: But first, the undersigned emphasizes that no party to this criminal action has acted in bad faith. Findings at page 7, line 22.

3 accommodate the schedule set forth below, a schedule intended to permit the defendant to complete motion practice and prepare for trial. The Hearing and Status of Discovery Since the Hearing In brief, the government attended the hearing before Judge Hollows represented by two Assistant United States Attorneys and two Antitrust Division Attorneys. The FBI had two agents present, one the case agent who has been assigned the matter for over five years and the other a well trained and highly skilled and sophisticated expert in computer technology who has spent a substantial period of time getting some of the electronic discovery to operate outside its normal environment. In order to learn how to make use of the discovery materials, which are now housed on some 48 hard drives (in addition to the 78 document disks and 91 disks containing audio/video files) the case agent was in regular contact and used the assistance of former employees of SK Foods LP, many of whom have agreed to cooperate with the government in this case and are compelled to do so under their plea agreement. The FBI computer expert had the benefit of discussing the key computer programs and operating systems with employees who had worked for the company in a capacity where they had direct knowledge of the computer system. The defense was represented by the undersigned and his associate attorney. Although the defense was able to obtain financial quotes from third party computer forensic firms and some information regarding the computer

4 issues, it advised Judge Hollows that it did not have the funds to retain and pay an expert to attend the hearing. As the result of the hearing and the follow-up visit to the FBI, and with some persuasion by Judge Hollows, the FBI computer expert volunteered to lend the defense two computers on which the company AAS system had been 2 loaded by him. The FBI computer expert delivered the computers to counsel s office and provided brief but helpful instructions as to how to connect it and conduct searches on the system. One of the two FBI computers was picked up by the defendant after a subsequent court appearance and was brought to his residence. And, the Antitrust Division, after months of the defendant s urging it to place some of its materials in a more useable format, has recently loaded some of them on to a disc for the defense s use. On the other hand, since the visit to the hearing and the visit to the FBI, the government has provided one more hard drive to add to the 48 hard drives and the 169 disc thus far provided as discovery. 2 The system houses a substantial body of information used by the company in its operations and which is necessary to track the disputed transactions forming the basis of the indictment. Up to that point, the government had first rejected attempts by the defense to gain access th the method by which the system had been accessed and then the best the government would do was to explain the manner in which it had loaded and operated the system to a retired FBI agent then employed by the defense. Judge Hollows persuasive abilities were not apparently as strong with respect to providing the defense with a copy of the FBI s typed inventory of the contents of the huge number of boxes at the location. The government has still not supplied the inventory referred to on page page 5, line 20, of the Findings, despite having asked for it again and the visit to the FBI having occurred over 3 weeks ago. Nor was the effort to have the government provide the defense with the results of its Brady searches in a readable format successful. Thus far the defendant has only a cryptic list of materials which will require a substantial amount of time to research.

5 The Defense Plans For Moving The Case Forward While the amount of materials to review here would strain any law firm, particularly under circumstances where no funds are currently available to facilitate that effort, the defense appreciates that the case must at some point move forward to trial even under circumstances where the defense will not be fully prepared. In order to do so, counsel for the defendant has determined to take the following measures: 1. While having an in-house IT (Information Technology) employee was not required by counsel s other cases, even the largest ones, in response to the needs of this case, counsel has hired at his own expense a commercially experienced full time employee, well conversant with computer technology. That person, who is related to counsel, will commence employment on or before June 1, 2011 and will be trained by the chosen vendor in the use of one of the search programs identified below. 2. Counsel will purchase, again at his own expense, a current version of either Summation or Concordance, the programs the government claims will give him ready access to the information on the 49 hard drives and will purchase and dedicate a computer work station to facilitate review of the discovery hard drives and discs in a physical

6 office dedicated to the Salyer discovery. (These efforts will not solve the problem or eliminate the need for mounting the discovery on a searchable platform, as discussed by Judge Hollows, but it will at least permit some level of preparation.) 3. The defense will apply under the CJA for funds necessary to: (a) employ experts and investigators; (b) for testing laboratories (c) to hire a third party information technology firm (d) for copying expenses; and (e) for any other expenses necessary to prepare for trial and for necessary motion practice. 4. The defense will request an on-the-record but sealed in camera proceeding where it will disclose to the Court (but not the prosecution) the outline of the defendant s intended trial defenses and future anticipated motions. It will do so notwithstanding the defendant s constitutional right not to reveal that information but in the interest of demonstrating the defense need for reasonable time to prepare. In addition, counsel will seek relief from the Court to facilitate the defendant s personal review of the hard copy and other discovery at the FBI offices and for that purpose: 5. The defendant will apply for permission to stay overnight in Sacramento at a hotel, as and when needed, in order to visit the FBI

7 offices, with notice to and approval by Pre-Trial Services, but without a custodial guardian or his having to seek a specific order of this Court to do so for each visit. The defendant will request that the FBI be ordered to make the discovery available to the defendant on 48 hour notice. 6. The defendant will seek an order of this Court barring the FBI case agent from monitoring his review of the discovery and requiring the assignment of a non-agent employee of the FBI to obtain and monitor the review of the evidence and barring such person from communicating with the investigating agents. See, page The requested order will preclude the FBI from recording or videotaping any conversations with counsel. (Such an order will facilitate both the review and communication with counsel during such sessions and preserve the defendant s attorney client privilege and his rights under the Fifth Amendment.) 7. The defendant will request an order permitting him to bring a small folding table and two folding chairs to the FBI office, and leave them in the outdoor pods, in order to permit him sit and review documents, a procedure which is presently onerous and time consuming because of the nature of the facilities. (See Findings at page 5, line 21 and page 6, line 4.) The defendant will also request

8 an order permitting him to photograph evidence as needed and to bring with him a small portable copying machine so as to be able to make immediate copies of documents in order to facilitate his research efforts. See, findings at page 5, line 22 through page 6, line 1. The defendant will, with the assistance of his family, continue to seek other avenues to supplement his defense efforts, including the return of the funds in Andorra previously authorized by the Court but now tied up in state litigation. He believes his family will continue to do so despite the efforts of the bankruptcy trustee, banks and other creditors to undermine the defense efforts. Request for an In Camera Hearing The defense believes that the Court should be made aware of the defendant s financial position, the challenges faced by counsel in preparing the case for motions and trial and the defenses the defendant intends to mount at trial and for which discovery and preparation are required. Those facts are relevant to this Court s determination but ought not be made available to the government. Counsel was not reasonably able to do so in the presence of the prosecution team and the investigators. Any such showing would be factual and specific to this case and not argument of the instant objection. Suggested Scheduling Order The defense believes that, even with these additional steps, the task of

9 preparing the replies to the pending motions, researching and preparing the next round of motions and gathering the facts in support and in preparing for trial will stretch the capacity of defense counsel. It is respectfully submitted that it is beyond the ability of counsel to provide the defendant with an effective defense if this Court were to order the schedule suggested by Judge Hollows. In so stating, counsel does in any way mean to impugn Judge Hollows judgment or experience in litigation matters but instead is acting in recognition of the specifics of the situation unknown to Judge Hollows and counsel s knowledge of the available discovery and of other otherwise confidential information. Following an in camera showing, the defense will, with some trepidation about its ability to conform and the parties ability to predict the outcome of the various motion hearings, request that the following dates be set (which have not yet been cleared with the Court s calendaring clerk): All Pending Motions: The defendant will file its replies to the government s responses on or before July 15, 2011 and argument and evidentiary hearings will be commenced on August 2, 2011 or thereafter on the Court s order. The Previously Scheduled Second Round of Motions : The Defendant will file any remaining motions by September 19, 2011, the government to respond by October 10, 2011 and any replies to be filed by October 24, Arguments and hearings will be held on November 15, 2011

10 or as thereafter set by the Court. Trial: A date for Trial will be set at the time of the hearing on the second round of motions but with the parties on notice to be available to try the case by May 1, Conclusion As recounted in Judge Hollows Findings, the defense is faced with an enormous task in reviewing the discovery the government has gathered over the past five years. At present, and without additional resources, it firmly believes that the task is insurmountable. No one on the defense side could have anticipated that it would have to spend seven months of virtually full time effort, seven days a week, including litigating multiple appeals to this Court and to the Ninth Circuit, to gain the defendant s release on bail. No one on the defense side could have predicted the enormous volume of the electronic discovery - quantified in electronic terabytes by Judge Hollows, and including wire tap conversations and rooms full of documents, or the fact that the government had made virtually no efforts to organize the materials in a manner as to be able to provide prompt and reasonable access to the discovery it had accumulated. Most certainly, no one on the defense side could have predicted the amount of time it would take to fend off the government s attempt to invade and make use of attorney client

11 privileged communications at the jail and elsewhere. Finally, no one on the defense side could have predicted the actions of creditors and the government in attempting to choke off the availability of the defendant s family resources to 3 fund a defense. Nonetheless, the defense recognizes that the case must proceed forward at whatever level of preparation it can bring to the table. For that reason, the defense requests that the Court permit an in camera presentation and set dates no earlier than those proposed in this objection. Respectfully submitted, Dated: April 29, 2011 SEGAL & KIRBY LLP BY: /s/ Malcolm S. Segal MALCOLM S. SEGAL Attorneys for Defendant FREDERICK SCOTT SALYER 3 It was ultimately only because of the extraordinary kindness of the defendant s sister, along with a few close friends, that he was able to gain his release from custody. She has tied up a huge amount of otherwise liquid real estate assets and cash in that effort and done far more than anyone could have expected from her since then to assist the defendant. She was able to do so only because she is entirely independent of her brother and no one can claim otherwise. In the case of the defendant s childrens trusts, their funds and real estate properties, creditors have managed to find theories, no matter how obtuse, to prevent them or their trustee from providing assistance in funding the defense.