You're listening to Bloomberg Law. I'm June Gronzo with Greg Store. In this day of electronic surveillance, we all know about the government wire tapping phones, but you may not know that just because the government has a lawful warrant to wire tap your phone, that doesn't mean FBI agents can tape every conversation. Take the case of Craig Dramal, a
former Galleon Group trader convicted of insider trading. Dramal's wife, Arlene, claimed that FBI agents wrongfully ease dropped on more than one d eight of her intimate conversations with her husband while they were lawfully tapping their phone to get information
on insider trading. New York Federal Judge Richard Sullivan refused to throw out those conversations, but Sullivan called the FBI's actions nothing short of disgraceful and said he was deeply troubled by this unnecessarily and apparently voyeuristic intrusion into the Jamal's private life. In other words, the FBI should have hung up the phone. Arlene Jamal sued the FBI, and in a departure, the FBI has settled the suit. Our guest as former federal prosecutor and and criminal trial attorney
George Newhouse, a partner at Denton's. George, how unusual is it for the FBI to settle a case? Good morning, June. Uh. It's really the case that the FBI, or frankly, the federal government settles these cases, particularly involving law enforcement. So that's that is something to take note of. But of course we don't know the amount of the money that was paid or whatever. The terms of the settlement are as confidential, so it may have been settled for all
low amount. Well, George, what is it about this case if we don't know the terms of the settlement, What is it about the case that might have prompted the FBI to settle here, you know, whereas normally they don't. Well, there are two now to at least two federal judges, Judge Sullivan in the Southern District of New York, who who handled the criminal prosecution of Craig Dremal, the Galleon trader whose phone was being tapped um and a judge in Connecticut who is holding the UH the case, the
civil case against the FBI agents. So two judges now have sharply criticized the FBI sum conduct in monitoring these phone conversations pursued into Title three. So I think when when federal judges are critical and suggests that there was wrongful conduct, then the government quickly tries to put those cases to bed. George, explain what Title three is and
what restrictions it imposes on the government. Title three is actually part of the Omnibus Crime Control on Safe Street Acts of but it's commonly referred to Title three, or
sometimes simply as T three. UM. That's a federal law that allowed past the nineteen sixty eight that allows federal agents the FBI to place wire taps on phone conversations between US citizens occurring inside the United States, conduct which of course a private citizen does is a is a felony, and before that the government had no authorization to conduct those kind of monitoring. It was initially passed in order
to combat organized crime and narcotics trafficking. UM. And the law does, in some circumstances allow the government to put this wire tap on, and that of course is monitored by federal agents who listen in on these phone conversations. And George, what are agents supposed to do? So? They tap somebody's phone, some of those conversations are going to be relevant to the investigation. Uh, is a rule just that they're supposed to hang up as soon as they realize that it's not relevant or or or is it
different because of a spouse? How does it work now? Exactly right? That's that's a great question. The law imposes a number of stringent requirements restrictions on what the government can do when they're conducting the tap, so they always have to have This is one reason why these taps are fairly rare because they are exceedingly labor intensive for
the federal agency. So literally scores of agents have to be around the clock listening in on phone calls because you never know when the call is going to come in, and they're required to monitor every call. Then here's the wrinkle.
They're required to do something called minimization, and they receive and did in this case receive detailed instructions from the supervising Assistant U S Attorney in New York that basically said to the agents, you can listen to every call, but once you determine that it's not pertinent or relevant to what we're investigating. In this case, insider trading, then
you must immediately switch off the machine. You you have to stop listening, you have to stop recording, and you can every now and then you can go back because they can still see that the calls are going on, they can go in and and listen for a minute to determine to make sure that they're not talking about matters that they're authorized to listen to, so it is restricted
by subject matter. And then finally they're told, if you are listening to a privileged conversation, if you're listening to a conversation between the subject and his lawyer, or a subject and his spouse, that's the marital privilege, then you have to be especially careful that we don't intrude into that protected sphere. And that was what occurred in this case.
There were, as June indicated, a hundred and eighty calls between Craig and his wife Arlene, and a number of those uh the monitoring went on too long before the agents switched it off, and at least three or four Judge Sullivan found were indefensible. Those calls apparently got into some very intimate details that sometimes, as we all know, husbands and wives will have conversations that they don't want
anyone else to hear. George, as a former federal prosecutor, do FBI agents often ignore those minimization requirements or expand what they're listening to wait a little too long? Well, here's the problem that the answer is the FBI. I have now worked with them for many years as a prosecutor, and I've worked on the other side as a white collar defense lawyer. This is the flagship of federal agencies. This is an agency with amazing people. They're they're dedicated,
they're intelligent. There they're well screened, but they do make mistakes. And these minimization rules, as you can imagine, are very difficult to actually implement because again, you can listen to every conversation, but how and at what point do you determine that it's not pertinent. So the instructions were given. Um, there were thousands of calls that were monitored, and the judge ultimately allowed the the monitored calls to come into evidence.
But there were some instances where mistakes were made. In Actually, the court in Connecticut dismissed the case against sixteen thirteen of the sixteen agents and only said, well, three agents may have made some mistakes. So the answer is it's actually difficult to implement um. I think the agents were probably operating in good faith, trying to do the best they can, but some of them did a better job and minimizing than others, and that was really what the
case turned up. George, can you talk just a bit more about you mentioned marital privilege and how does that work in practice? I mean, if if the wife call calls them up and her first words are the inside information arrived, surely they can they can keep listening to that, right, great question, Absolutely correct. So marital privilege, like the attorney client privilege, is subject to something called the crime fraud exception.
So if if the subject of the conversation is, hey, dear, you know, the insider trading information that we're getting is really great, then the agents would be allowed to listen to that and to monitor that. But other than that, the instructions were clear. If it's between the husband and the wife and they're talking about the school kids that they're talking about, as in this case marital problems, that's clearly not relevant and they have to switch it off.
It's just about a minute. Is the FBS the FBI under a lot of scrutiny late lately in pressure because of this and the FBI agent leaking in the Billy Walters case. Well, again, the FBI is a large agency. They have thousands of agents. There are always going to be some isolated incidents where an agent does something that is um uh called into question, and I think the agency responds appropriately to that. But I don't see any any trend here. The work that they do is um
by all measures usually exemplary. Um. I don't I don't see a trend here. Um. The interesting thing about this case, by the ways, this was the first time in around two thousand nine when they went up on a wire that any federal agency had ever used a wire tap in a securities fraud investigation. So that did attract some attention. Thank you so much for being on Bloomberg Law. As always, it's a pleasure to have you. That's former federal prosecutor George Newhouse. He is a partner at Denton's