En Banc 2nd Circuit Tackles Data Retention

MANHATTAN (CN) - Allowing the government to hold a suspect's hard drive for 2 ½ years would mean that, in the "computer age," prosecutors get a "bonanza," a circuit judge remarked at a rare en banc appellate hearing on Wednesday.

All 13 judges of the Second Circuit gathered to reconsider a ruling that vacated the two-year sentence of Connecticut accountant Stavros Ganias for underreporting $160,000 in federal income taxes last year.

Stanley Twardy Jr., who represents Ganias for Day Pitney, kicked off what would become roughly 90 minutes of arguments by counting the days that have passed since the government search of his client's hard drive that brought the parties there Wednesday.

It has been 11 years, 10 months and 11 days since Army investigators seized Ganias' computers in a probe that snared two of his clients - American Boiler and Industrial Property Management, a military contractor - in late 2003, he told the court.

Army investigators never purged the files that were unresponsive to that warrant, and later asked the IRS to join the investigation.

Suspecting that Ganias cheated the tax man, federal prosecutors obtained a warrant to search the data that Army investigators gleaned early in 2006.

In a mixed decision, a Second Circuit panel found last June that allowing the government to retain a suspect's computer indefinitely to search for evidence of another crime later risks turning "every warrant to search for particular electronic data" into "a general warrant."

Touted as a victory for privacy activists, the holding caused enough controversy within the chambers of the Second Circuit to agree to an en banc review.

Such a hearing is granted only to a smattering of cases every year, and is even less common here in that the government did not request the appeal.

As they untangled the issues for much of the afternoon, many of the judges offered what they called "paper world" analogues to fit the computer age.

For Circuit Judge Gerard Lynch, the government's search of Ganias' computer was similar to seizing all of his filing cabinets.

"You're saying that, in the computer world, 'We get a bonanza,'" Lynch said.

Denying that was the case, Assistant U.S. Attorney Sandra Glover compared it to the government keeping a diary that had two days of entries related to a murder, but she added that "computers are a different beast" than other physical evidence.

Circuit Judge Reena Raggi pushed the prosecutor on the scope of the government's search.

"You agree that you over-seized, right?" Raggi asked.

"Correct," Glover acknowledged, but also argued that the government had to hold onto the hard drives to authenticate the evidence for trial.

Agents typically demonstrate this by testifying to the chain of custody, and forensic experts have other ways of tying seized files to a defendant, Lynch noted.

Much of the arguments hinged around so-called "hash values," which are often described as the digital fingerprints of a file.

Chief Circuit Judge Robert Katzmann asked the prosecutor whether the existence of such forensic information weakened her argument.

Glover countered that gleaning those hash values can be difficult in cases involving large amounts of evidence and metadata.

Defense attorney Twardy argued that allowing the government to retain a computer indefinitely for verification would create what he called an "authentication exception to the Fourth Amendment," referring to the Constitution's prohibition against unreasonable searches and seizures.

Circuit Judge Denny Chin, who authored the lead opinion in the earlier appeal, pressed the prosecutor bluntly: "Is it your position that the government can retain the documents indefinitely?"

Glover agreed that the government did not have that authority, but that it could hold them for a "reasonable" time through "the length of the investigation."

Circuit Judge Richard Wesley noted that the definition of reasonable has its limits.

"You don't just bank all of the files for every other purpose, as the years go on," he said.

Although they seemed largely skeptical of the government's position, the circuit reserved its opinion on the matter.

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