United States v. Ozar (859 F. Supp. 1545, 1994)

ORDER

GAITAN, District Judge.

Pending before this Court is the defendants’ joint motion to suppress, filed June 22, 1993. Defendants seek to suppress the fruits of an electronic surveillance conducted by the Federal Bureau of Investigation (FBI) during the investigation of this case. The defendants have asserted that the suppression should be granted because: (1) there was no probable cause to support the authorization of the surveillance; (2) there was no necessity for the use of the electronic surveillance; and (3) the United States failed to properly minimize the electronic surveillance it did undertake.

On February 8, 1994, Chief United States Magistrate John T. Maughmer filed a 96 page report and recommendation to this Court. Judge Maughmer’s recommendation was based upon an extensive evidentiary hearing which lasted approximately three weeks. The conclusion that he reached and recommended to this Court is that the defendants’ joint motion to suppress be granted. On March 8, 1994, the United States filed its objections to the report and recommendation. The government’s response totaled 195 pages. Thereafter, On April 8, 1994, the defendants filed their joint response to the United States’ objection. Their response totaled 153 pages.

This Court has reviewed these filings which total approximately 443 pages plus supportive documentation, and after much thought has decided to grant the joint motion to suppress. In doing so, this Court adopts the report and recommendation of the Magistrate. The proposed findings of fact and conclusions of law are adopted as this Court’s findings of fact and conclusions of law. There is no useful purpose served in this Court filing a separate findings of fact and conclusions of law.

By granting this joint motion to suppress, this Court does not pass judgment on FBI electronic surveillance in general. This Court merely addresses the problems associated with those relating to this case. Those problems are numerous and are reflected in the report and recommendation.

Wherefore, it is ordered that defendants’ joint motion to suppress is granted.

REPORT AND RECOMMENDATION

MAUGHMER, Chief United States Magistrate Judge.

On October 18, 1992, the grand jury returned a ten-count indictment charging Defendants Frank Morgan,I.I. Ozar, Sherman W. Dreiseszun and Larry J. Bridges with conspiring to defraud the United States in the bidding process for government leases in violation of 18 U.S.C. §§ 371, 1031 and 1001. Presently pending before this Court is defendants’ motion to suppress the fruits of the electronic surveillance conducted by the Federal Bureau of Investigation (“FBI”) during the investigation of this case. In arguing for suppression, defendants allege that: 1) there was no probable cause to support the authorization of the surveillance; 2) there was no necessity for the use of electronic surveillance; and 3) the United States failed to properly minimize the electronic surveillance it did undertake.

In order to fully consider the issues presented by the defendants, this Court conducted an extensive evidentiary hearing over a period of 21 days, listening to the testimony of over 25 witnesses and admitting over 280 exhibits into evidence. On the basis of that hearing, the record, and the arguments of counsel, this Court submits the following proposed Findings of Fact and Conclusions of Law and accordingly recommends that the District Court enter an order granting defendants’ motion to suppress evidence.

I. Proposed Findings of Fact

A. BACKGROUND INFORMATION

1. On June 5, 1991, a federal district court granted the government’s request to conduct audio and video surveillance of Defendant Morgan, Defendant Ozar, Defendant Bridges, Defendant Dreiseszun, David Fein-gold “and others as yet unknown” during Saturday morning business meetings being conducted at the offices of M-D Management, Inc. An Affidavit of a Special Agent of the Federal Bureau of Investigation (“the June 5 Affidavit”) accompanied the application for electronic surveillance and provided the only information presented to the district court in support of the government’s request.

2. M-D Management was a management company owned and controlled by Morgan and Dreiseszun. Both Morgan and Dreisesz-un had offices at M-D Management and conducted many of their business activities there. In particular, Morgan and Dreiseszun regularly held Saturday morning meetings at M-D Management’s offices with Bridges, Feingold and a host of other business associates.

3. Initially, electronic surveillance at MD Management was only authorized during these Saturday morning business meetings. This limited surveillance was conducted on Saturdays from June 8,1991 through August 20, 1991. However, after August 20, 1991, daily electronic surveillance at M-D Management was authorized by the district court. Ultimately, on September 27, 1991, the court further extended the surveillance to include a wiretap on the telephones at M-D Management. Electronic surveillance at M-D Management ended on December 12, 1991.

4. Morgan and Dreiseszun were business partners involved in a wide variety of business enterprises in the Kansas City area, including banking, commercial real estate development and shopping centers. Suffice it to say that their financial presence and control permeated the Kansas City business community.

5. Ozar was a long time business associate of Morgan and Dreiseszun, and owned interests, along with Morgan and Dreiseszun, in several partnerships.

6. Feingold was Morgan’s son-in-law, the president of Metro North State Bank (“Metro North”) and also owned interests in several partnerships with Morgan, Dreiseszun, and Ozar.

7. Other key business associates included Bridges, a real estate developer in the Kansas City area, and his former business partner, Ted Ehney. Bridges and Ehney originally jointly owned Executive Hills, Inc. (“Executive Hills”) and were responsible for developing many commercial real estate projects in the Kansas City area, at times in conjunction with Morgan, Ozar and/or Dreis-eszun. GX 4 at 40. In December of 1988, Bridges and Ehney formally split their business . interests with Ehney assuming sole ownership of Executive Hills North, Inc. (“Executive Hills North”), and Bridges assuming sole ownership of Executive Hills. Executive Hills and Executive Hills North received substantial financing from Metro North and Home Savings Association (“Home Savings”).

8. Among the many business interests held by Morgan, Ozar and Dreiseszun were Home Savings and Metro North. Morgan, Ozar and Dreiseszun also sat on the Board of Directors for these institutions.

B. FINDINGS OF FACT REGARDING THE EXISTENCE OF PROBABLE CAUSE IN THE JUNE 5 AFFIDAVIT

9. The June 5 Affidavit relied on information from four sources: an Office of Thrift Supervision (“OTS”) criminal referral, an OTS examiner, Lloyd Steven Grissom and Randy Nay.

(i)OTS Criminal Referral — After conducting a routine audit of Home Savings, the OTS filed a criminal referral with the FBI regarding loan transactions between Home Savings, Bridges, Ehney and their companies. This criminal referral provided the basis for some information contained in the June 5 Affidavit.

(ii) OTS Examiner — The OTS examiner for Home Savings who participated in the examination of Home Savings that occurred during the ten months prior to the March, 1991 seizure of Home Savings by federal regulators also provided information that was included in the June 5 Affidavit. Tr. 841.

(iii) Lloyd Steven Grissom — Lloyd Steven Grissom, a business associate of Ehney and the accountant and comptroller of Executive Hills North from 1986 to 1989, approached the FBI in late 1989 and offered to cooperate with the government in its investigation of Ehney and Executive Hills North in exchange for immunity in that case. Tr. 40, 984, Tr. [9/18/93 Vol. II] 48^49. In cooperating with the Executive Hills North investigation, Grissom provided substantial information concerning the illegal activities of Eh-ney. Tr. 985-86.

(iv) Randy Nay — Randy Nay held various positions at Home Savings, ranging from Vice President to Vice Chairman, during his fifteen year tenure with the savings and loan association. Nay departed from Home Savings in December of 1989. Tr. [9/7/93] 66-67.

10. The June 5 Affidavit relied on several activities involving Morgan, Ozar, Dreisesz-un, and Bridges as bases for probable cause to believe that criminal activity was occurring or being discussed at M-D Management during the Saturday morning meetings. These activities can be broken down into two critical groups — historical activity and ongoing activity.

11. Those respective groups of activities were based on information on several subjects obtained from various sources as reflected below:

1. HISTORICAL ACTIVITY

Subject (Source)

a. One Petticoat Lane (OTS Referral)

b. Metro North Loans to Bridges (OTS Referral)

c. Home Savings $26 Million Loan (OTS Referral)

d. Pars Lease (Grissom)

e. Kickbacks (Grissom)

f. Saturday morning meetings (Nay and Grissom)

2. ON-GOING ACTIVITY

Subject (Source)

a. 127th & Antioch Property (Grissom)

b. Standstill Agreement (OTS Examiner)

This Report and Recommendation addresses each of the above subjects in turn, first making all the necessary Findings of Fact and then turning to the Conclusions of Law.

1. Findings of Fact Regarding Historical Activity

12. Following an examination of Home Savings in 1990, the OTS prepared a criminal referral which the FBI received in February, 1991. Although there had been some minimal mention of Morgan in an earlier 1989 FBI investigation of Executive Hills North and Ehney, the receipt of the OTS criminal referral in February, 1991 marked the real beginning of the FBI investigation of Morgan, Ozar, Dreiseszun, Bridges and Feingold. Tr. 27.

13. The OTS criminal referral generally contended that the proceeds of certain loans made to Bridges and Ehney by Morgan-controlled financial institutions, such as Home Savings and Metro North, found their way into various partnerships in which Morgan, Ozar and Dreiseszun had interests. The OTS criminal referral additionally contended that Morgan, Ozar and Dreiseszun did not disclose their interests in these partnerships to federal bank regulators or the involved financial institutions. Tr. 26, 51-62.

14. The OTS criminal referral was comprised of preliminary investigative findings and identified further investigation that might assist law enforcement authorities in fully examining the existence of a potential violation. Tr. 1708-13; GX 96, DX 493 at 6.

15. Upon receipt of the OTS criminal referral, the FBI did not conduct its own review of the work papers accompanying the referral to determine for itself whether the conclusions in the criminal referral were properly supported. Tr. 149-51, 456, 1708-13. According to the FBI, it had no reason to question the accuracy of the allegations in the criminal referral. Tr. 456.

a. Findings of Fact Regarding the One Petticoat Lane Transaction Referenced in the June 5 Affidavit

16. Relying on the OTS criminal referral, the June 5 Affidavit stated in Paragraph 19 that, in 1987, Home Savings made a loan to Executive Hills (Bridges) for construction of an office building known as One Petticoat Lane. On the date of this loan, a part of the land on which One Petticoat Lane was to be built was owned by a partnership in which Morgan, Dreiseszun and Ozar had an interest. At this same time, Morgan, Dreiseszun, and Ozar were each on the Board of Directors of Home Savings. The Morgan, Dreiseszun and Ozar interest in the One Petticoat Lane land was deeded to Executive Hills only six days after the completion of the loan from Home Savings to Executive Hills.

17. The June 5 Affidavit stated that by failing to disclose their interest in the land upon which One Petticoat Lane was to be built, Morgan, Dreiseszun and Ozar violated banking regulations. The June 5 Affidavit further stated “[t]he above also indicates possible violations of Title 18, United States Code, Section 1344” (bank fraud).

18. Although not stated specifically, presumably the reference in the June 5 Affidavit to banking regulations was to Regulation 0 of the Federal Reserve Act. Regulation 0 is a civil regulation which prohibits a bank from making loans which inure to the benefit of a principal owner or officer of the bank unless the owner or officer fully discloses this fact to the bank. Tr. 386-87, 390.

19. The OTS criminal referral concluded that if funds used by Executive Hills to purchase the Morgan, Ozar and Dreiseszun property had come from the Home Savings loan proceeds for the One Petticoat Lane project, a “serious regulatory violation” would have taken place. However, neither the OTS criminal referral nor the June 5 Affidavit provided any explicit information that Executive Hills did in fact use the One Petticoat Lane loan proceeds — as opposed to other funds — to purchase the Morgan, Ozar, and Dreiseszun property.

20. The June 5 Affidavit also cited the deposit of a portion of the One Petticoat Lane construction loan proceeds into the account of One Kansas City Place, a partnership in which Morgan, Ozar, Dreiseszun and Bridges each had an interest, as possible bank fraud in violation of 18 U.S.C. § 1344. The June 5 Affidavit specifically said, in Paragraph 19(b), that “there was no documentation as to the ultimate recipient of the funds.”

21. While the June 5, 1991 Affidavit stated that “there was no documentation as to the ultimate recipient of the funds,” in fact, the OTS criminal referral actually said “due to the fact that the information obtained to date on the One Kansas City Place account does not cover the time period in which the One Petticoat Lane loan proceeds were being disbursed, we have not yet identified the ultimate recipient of the proceeds that went to that account from this loan. Even though the draw requests provided to Home Savings appear to be supported with invoices from contractors who were reportedly doing work on the One Petticoat Lane project, we cannot be sure this work was actually per-formed_” (Emphasis added). This supplementary and explanatory information from the criminal referral was not included in the June 5 Affidavit.

22. The OTS criminal referral also stated that it appeared from Home Savings records that the One Petticoat Lane loans to Executive Hills had been paid in full by Executive Hills. Likewise, this information was not in the June 5 Affidavit.

b. Findings of Fact Regarding the Metro North Loans to Bridges Referenced in the June 5 Affidavit

23. The June 5 Affidavit, Paragraphs 20-23, stated that Metro North made loans of approximately $49 million over a 14 month period to Bridges and that approximately $30 million of those loan proceeds were then immediately disbursed to partnerships in which Morgan, Dreiseszun and Ozar had interests.

24. While the June 5 Affidavit quoted a figure of $49 million dollars in loans from Metro North to Bridges, the actual outstanding debt during that 14 month period never exceeded $19 million. Tr. [9/9/93] 115-19.

25. In April, 1989, the Federal Reserve Board (“FRB”) expressed concern to Morgan that a civil regulatory violation might have occurred in connection with some of the Bridges loans since proceeds appeared to flow ultimately to Morgan-related partnerships. In response, all of the loans made by Metro North to Bridges were repaid. The FRB cited the parties involved for civil regulatory violations in its bank examination report. DX 424-25. However, the FRB made no criminal referral of this civil regulatory violation, sought no monetary penalties, and took no other enforcement action. Tr. 386-89, 639 — 44.

26. The decision of the FRB not to file a criminal referral or to seek civil monetary penalties was based on the inadvertence of the violation, the fact that the loans were repaid promptly, the absence of personal benefit to Morgan, Dreiseszun and Ozar, and the insufficiency of information available to conclude one way or the other whether there was any criminal wrongdoing. Tr. 647-50, 656-61, 666.

27. Following the FRB’s examination of loans to Bridges, the FRB made its work papers available to the FDIC which was then beginning a full-scale examination of Metro North. The FDIC, which had primary regulatory authority over Metro North, did not issue a citation for regulatory violations in connection with the Metro North loans to Bridges, did not make a criminal referral and did not seek civil monetary penalties. Tr. 661-63, Tr. [9/9/93] 17-18.

28. The June 5 Affidavit did not inform the district court that both the FRB and FDIC had previously examined the Metro North loans to Bridges and, while the FRB found inadvertent civil regulatory violations, neither regulatory agency filed a criminal referral or sought civil monetary penalties.

29. The June 5 Affidavit, Paragraph 23, stated that a portion of the funds used to repay the Bridges loan from Metro North came from a certificate of deposit owned by Bridges and that the source of these funds was “questionable.” The basis for this information was the OTS criminal referral, which referred to the source of these funds as “unknown.” The criminal referral never referred to the source of funds as “questionable.” The June 5 Affidavit provided no explanation for the FBI conclusion that the source of these funds was “questionable” as opposed to “unknown.”

c. Findings of Fact Regarding the $26 Million Loan from Home Savings to Executive Hills North Referenced in the June 5 Affidavit

30. The June 5 Affidavit, Paragraphs 26-27, reported that, the OTS audit revealed that in early 1988, Executive Hills North, which was controlled by Ehney at that time, received $26.95 million in construction loans from Home Savings, some of the proceeds of which Executive Hills North illegally paid to Morgan, Ozar and Dreiseszun controlled partnerships.

31. Specifically, on April 29, 1988, Executive Hills North transferred $925,000.00 to Morgan, Ozar and Dreiseszun partnerships (“April 1988 transaction”). This transfer created a negative balance in the Executive Hills North account which was offset by a disbursement of loan proceeds into the Executive Hills North account from Home Savings. The June 5 Affidavit concluded that Home Savings loan proceeds were paid to the benefit of Morgan, Ozar and Dreiseszun instead of being used for their proper purpose.

32. On July 12, 1988, Home Savings transferred $595,000.00 of Home Savings loan proceeds into the accounts of Executive Hills North and/or Ehney (“July 1988 transaction”). Meanwhile, on that same day, amounts totalling $1.1 million were transferred from Ehney’s personal account to partnerships in which Morgan, Ozar and Dreiseszun had interests. The June 5 Affidavit, thus, clearly inferred that the proceeds of Home Savings construction loans to Executive Hills North and/or Ehney were illegally paid to Morgan, Ozar and Dreiseszun controlled partnerships for the benefit of those individuals by way of the April 1988 transaction and the July 1988 transaction.

(i) The April 1988 Transaction

33. One of the ways in which defendants and Ehney made capital contributions to their various partnerships was by using capital disbursements received from other partnerships. This practice was not an unusual partnership accounting method and should have been understood as such by the FBI.

34. In April 1988, Ehney received a partnership distribution from Morgan partnerships in the amount of $925,000. This distribution was designed to be a “wash transaction,” in that partners receiving the distribution would contribute that money back to other Morgan partnerships as capital contributions. Tr. [9/9/93] 101-02, DX 437, DX 457, DX 458.

35. The $925,000 partnership distribution was deposited into Executive Hills North’s account and five checks totalling $924,999.20 were paid out of that account to other Morgan partnerships in which Ehney or Executive Hills North were partners.

36. When the checks from Executive Hills North to the other Morgan partnerships cleared Executive Hills North’s account they created a substantial negative balance in that account. Tr. 1538-40, 1603; GX 86.

37. The existence of a negative balance in the Executive Hills North account represented an extension of credit to Executive Hills North by its bank. Tr. 1635.

38. At the same time those transactions occurred, Executive Hills North submitted a draw request of $1,065,240 to Home Savings in order to obtain a portion of the $26.95 million Executive Hills North construction loan. The request had attached pre-signed checks to vendors totalling $1,065,240, and further asked that Home Savings wire funds in that amount to Executive Hills North’s account and then mail the checks to the payee vendors. Tr. 1533-35; GX 91.

39. Per this request, Home Savings wire transferred $1,065,240 to Executive Hills North’s account. The deposit of these funds eliminated the negative balance in the Executive Hills North account and created a positive balance. Tr. 1538-41; GX 86.

40. OTS was aware the April 26, 1988 deposit of $925,000 to Executive Hills North’s account represented a distribution from Morgan related partnerships. Further, the OTS was aware that the $924,999.20 in checks from the Executive Hills North account were written to the Morgan-related partnerships on the same day the distribution was deposited into the Executive Hills North account. Tr. 1628-1630, 1541-42.

41. Although the OTS criminal referral “suspected” that Morgan, Ozar and Dreisesz-un knew that Ehney used Home Savings loan proceeds to “finance” his $925,000 capital contributions, absolutely no factual basis is presented in either the criminal referral or the June 5 Affidavit to support this suspicion.

(ii) The July 1988 Transaction

42. Although more convoluted, the July 1988 transaction was essentially the same as the April 1988 transaction.

43. In July 1988, Ehney received a partnership distribution totalling $994,950. At the same time, Ehney borrowed $541,550. These two amounts, totalling $1,536,500, were deposited in Executive Hills North and/or Ehney’s account. Tr. 1648, 1659-60, 1663; Tr. [9/9/93] 106-07; DX 438, DX 459, DX 461, DX 462, DX 466.

44. At the same time, pursuant to a draw request from Executive Hills North, Home Savings loan proceeds in the amount of $595,-758.51 were deposited into the Executive Hills North and/or Ehney account.

45. If the Home Savings loan proceeds of $595,758.51 had not been deposited into the Executive Hills North and/or Ehney account, that account would have had a negative balance. Tr. 1565, GX 87.

46. Home Savings had no reason to suspect that Executive Hills North would use the $595,758.51 in loan proceeds in any manner other than to pay contractors inasmuch as the required draw request was accompanied by contractors’ invoices and unsigned checks in payment of those invoices. Tr. 1547-49.

d. Findings of Fact Regarding the False Pars Lease Allegation in the June 5 Affidavit

47. The Home Savings decision to loan $26.95 million to Executive Hills North was based to a large extent on the existence of a lease of a significant amount of Executive Hills North building space to a tenant known as “Pars.”

48. During the 1988 OTS examination of Home Savings, OTS discovered two different Pars leases in the file for the Executive Hills North loan, and requested an explanation. Home Savings called Ehney, who explained the initial lease as a mistake, and Home Savings reported Ehney’s explanation to the OTS examiners. Tr. [9/3/93] 60-61; DX 429. OTS examiners then visited Executive Hills North and discovered a third lease which reflected the actual terms agreed to by Executive Hills North and Pars. This lease was less favorable to Executive Hills North than either of the other two leases in the Home Savings loan file.

49. After OTS and Home Savings were made aware of the third Pars lease, the president of Home Savings, Morgan, Ozar and Bridges attended a meeting at Executive Hills North, with Ehney and Grissom. A floor-by-floor inspection of the Pars building was conducted in order to determine the precise extent to which the building was actually occupied. Tr. [9/3/93] 71-78, [10/18/93 (a.m.)] 15-19.

50. An FBI 302 report prepared to memorialize a March 13,1991 interview of Gris-som states that, at the meeting where the Pars lease was discussed, Morgan “commented that there was a tenant in the building and that there was no problem.” GX 16 at 292. In addition, the notes of the FBI agents taken dining an interview with Gris-som reflect that Grissom explained to them that Morgan commented there was no problem because Pars would probably commit to leasing the remaining office space. Tr. 1182-84, 2149-50; DX 492 at 6. This information was not included in the June 5 Affidavit.

51. Paragraph 27 of the June 5 Affidavit stated that the Pars lease relied on by Home Savings in its loan decision was materially different than the lease actually entered into between Pars and Executive Hills North. The June 5 Affidavit further stated that when OTS questioned the president of Home Savings about this discrepancy he said that “Frank (Morgan) will talk to Ted (Ehney) about it (the lease) on Saturday.”

52. The June 5 Affidavit, Paragraph 14(b) and (c), stated that shortly after this discussion, Grissom attended a Saturday morning meeting at M-D Management where Morgan, Ehney, Bridges and others discussed the Pars lease.

53. Paragraphs 10,14(b), (e) and 27 of the June 5 Affidavit alleged that Morgan and Ehney were both involved in the submission of a “false” lease by Executive Hills North to Home Savings for purposes of obtaining a loan. The June 5 Affidavit further asserted that this topic was discussed at a Saturday morning meeting at M-D Management.

54. Paragraph 10 of the June 5 Affidavit stated that Grissom told the FBI that “Eh-ney revealed to him [Grissom] specific criminal activity regarding [Morgan, Dreiseszun, Ozar, Feingold, Bridges and Ehney] defrauding Home Savings through a false lease agreement provided to Home Savings in consideration for a loan.” See also ¶¶ 14(b), 27 of the June 5 Affidavit.

55. The FBI, however, testified that the basis for the June 5 Affidavit’s assertion that Morgan, Dreiseszun, Ozar, Feingold and Bridges were involved in a lease fraud were actually conclusions the FBI — not Ehney or Grissom — drew from the conduct of Morgan during and following the inspection of the Pars office space at Executive Hills North. Tr. 1886-88, 2134-35.

56. Rather than attributing the conclusion about Morgan’s involvement in lease fraud to the FBI, the June 5 Affidavit characterized this conclusion as information supplied by Ehney through Grissom.

57. Grissom did not receive specific information that Morgan, or the other defendants, were involved in any false lease agreement scheme and did not make that statement to the FBI. Tr. [10/18/93 (a.m.) ] 22.

58. Grissom did not tell the FBI that it was his opinion that Morgan, Dreiseszun, Ozar, Feingold and Bridges were knowing participants in a lease fraud scheme. Tr. [10/18/93 (a.m.) ] 22, 24-25, [10/19/93] 26.

59. Based on Findings Nos. 45 through 56, information in the possession of the FBI did not lead to the inference found in the June 5 Affidavit that the defendants were involved in the submission of a false lease by Executive Hills North to Home Savings for purposes of obtaining a loan.

e. Findings of Fact Regarding the Kickback Allegation in the June 5 Affidavit

60. Based upon information allegedly obtained from Ehney, Grissom told the FBI that Ehney and Bridges were required to give Morgan a 50% interest in every Eh-ney/Bridges project in exchange for financing from a Morgan-related bank. Grissom reported to the FBI that Ehney told him that “in exchange for obtaining loans ... Ehney and Bridges had to personally give Frank Morgan an ownership interest in the project when it was completed.” Tr. 2125, Tr. [10/18/93 (a.m.) ] 26-29.

f. Findings of Fact Relating to the Information Regarding Saturday Morning Meetings Contained in the June 5 Affidavit

61. The June 5 Affidavit stated, at Paragraph 44, that probable cause existed to believe that Morgan, Dreiseszun, Ozar, Bridges and Feingold met regularly at M-D Management on Saturday mornings to conduct or discuss illegal activity and would be likely to do so in the future. This information was based on statements from Randy Nay (identified in the June 5 Affidavit only as a confidential source (“CS”)) and Grissom. Tr. 72-74.

62. The June 5 Affidavit concluded that since Bridges and Feingold both attended the Saturday meetings, those meetings must involve discussion of criminal activity because there was no other legitimate reason for both of these individuals to attend the meetings at the same time.

63. Paragraph 44(b) of the June 5 Affidavit stated that “investigation has not disclosed Feingold to be a member of any of these partnerships,” referring to Morgan/Dreiseszun/Ozar partnerships discussed in the OTS criminal referral. In fact, the FBI undertook no independent investigation to determine what interests Feingold had in any of the relevant partnerships.

64. As of June 5, 1991, public records demonstrated that Feingold was a partner in MT Investment Company and 100% owner of MD Associates # 3, both of which were partners in several of the Executive Hills/Morgan entities listed in the June 5 Affidavit. Tr. [9/9/93] 123-28; DX 514, DX 515A, DX 515B. Moreover, the OTS criminal referral identified Feingold as an owner of M-T Investment Company, as well as a partner in 8400 Partners and 8880 Ward Parkway, all of which were discussed in the June 5 Affidavit or the OTS criminal referral. Tr. 2539-44.

65. Paragraph 46(a) of the June 5 Affidavit described the Saturday meetings at M-D Management as “secret.” Further, in describing the Saturday morning meetings, Paragraph 15(a) of the June 5 Affidavit stated that “CS” (Nay) told the FBI that Morgan, Dreiseszun and Ozar “do not divulge their banking secrets” beyond the group of “conspirators” listed in Paragraph 3 of the affidavit, and that “the content of [the Saturday meetings at M-D Management] is not disclosed to those outside of the group.”

66. What Nay actually told the FBI agents was that confidential borrower information would not be disclosed to outsiders. Tr. [9/7/93] at 94.

67. Paragraph 15(b) of the June 5 Affidavit stated that Nay told the FBI that “on all major loans during 1985 to 1989 ... initial discussions would take place outside the financial institutions with Morgan, Ozar and Dreiseszun.” Paragraph 15(b) of the June 5 Affidavit also attributes to Nay the inference that Home Savings’s loan committee was a “rubber stamp” for Morgan, see Tr. 3407, by stating that “Morgan or the borrower would tell [Nay] that discussions had taken place and a package needed to be put together for the loan committee approval.”

68. What Nay actually told the FBI was that discussions concerning loans by Home Savings might occur at Saturday morning meetings and those discussions were always repeated and elaborated on at Home Savings where loan packages were put together. Tr. [9/7/93] 92-93, 96-97, 135, 142, Tr. 3406-07.

69. In response to FBI questioning as to why Home Savings board minutes showed no dissent with regard to loan packages presented to them, Nay stated that the loan packages presented to the board already had been through an initial winnowing process, and only those loans which the Home Savings’ staff felt would be approved were ever actually presented to the board. Tr. [9/7/93] at 92-93.

70. Nay told the FBI that, on occasion, borrowers would tell Nay that Morgan had suggested they talk to Nay, or that Morgan would call ahead to Nay and indicate that a prospective borrower would be coming to Home Savings. On those occasions, Morgan did not instruct Nay to prepare the loan documents for execution, but would tell Nay to put together a loan package to see if the proposed loan was acceptable. Nay told the FBI that any Saturday morning discussions regarding loans were always repeated and elaborated on at Home Savings, that loan packages were put together based on discussions occurring at Home Savings, Tr. 3405-07, and that loans referred to Home Savings as a result of Saturday discussions would be subjected to the entire underwriting process, just as any other prospective loan. Tr. [9/7/93] 100-01, 105-08, 134-36, 151.

71. Paragraph 15(b) of the June 5 Affidavit stated that Nay was “not allowed to stay” at the Saturday meetings for discussions involving Home Savings, and that Nay was “dismissed” from the meetings prior to such discussions.

72. Nay, however, told the FBI, as reflected by the FBI report of that interview, that he “would conduct whatever bank business Morgan had asked him to attend [the Saturday morning meeting] for and then he would leave.” GX 42, GX 43. Nay never told the FBI that he had ever been “dismissed” from a Saturday morning meeting. Tr. 3397.

73. Nay further told the FBI that Morgan had done nothing wrong and that Nay did not believe that Morgan, Dreiseszun, or Ozar had committed bank fraud or any other illegal acts. Tr. 3387-89, Tr. [9/7/93] at 82-83. This information from the confidential source was not included in the June 5 Affidavit.

74. The June 5 Affidavit stated that Gris-som told the FBI that he attended a Saturday meeting at M-D Management to specifically discuss the Pars lease matter. The sole basis for this statement was the April 13, 1991 FBI interview of Grissom. Tr. 2179. No written record or FBI 302 report was prepared of this interview. Furthermore, no written record of Grissom’s statement that the Pars meeting occurred at M-D Management exists. The FBI interviewed Grissom on other occasions about the Pars lease for which written FBI 302 reports were prepared. Those FBI 302 reports do not reflect any statements by Grissom that any meeting to discuss the Pars lease occurred at M-D Management. Tr. 1199-1203; 2158-66; GX 15, GX 16, DX 407A 63-66; 169-70, 213-17.

75. Grissom and Gerhardt, the president of Home Savings, were the only two attendees of the Pars lease meeting to testify about the location of the meeting and they each testified that the meeting occurred, in its entirety, at Executive Hills North, not at M-D Management.

76. Based on Findings Nos. 47, 48, 72 and 73, the meeting referred to by Grissom at which Morgan, Ehney, Bridges and others discussed the PARS lease did not occur at the M-D Management offices.

2. Findings of Fact Regarding Ongoing Activity

a. Findings of Fact Relating to the 127th & Antioch Property Information Included in the June 5 Affidavit

77. During the course of the Morgan investigation, the FBI became concerned that the activity alleged in Paragraphs 10-27 of the June 5 affidavit was too stale to support the finding of probable cause necessary to secure a court order authorizing surveillance. With this concern in mind, the FBI asked Grissom for more current information about criminal activity involving the defendants. Tr. 822-23, 1305-10, 1957, 2400-01, 3422-26, Tr. [10/18/93 (am) ] 48.

78. In response to the FBI’s request for additional information, Grissom related information concerning property located at 127th and Antioch in Overland Park, Kansas which he thought Bridges might purchase. The FBI posed a hypothetical scenario in which Bridges would purchase that property in a transaction involving criminal activity similar to the “kickback” scheme alleged in the June 5 Affidavit and asked Grissom if, in his opinion, such a situation could occur. Grissom acknowledged that such a scenario could occur. Tr. [10/18/93 (am)] 53-55, [10/19/93] 57-59, 70-71.

79. With respect to the property at 127th 6 Antioch, Paragraph 28(b) of the June 5 Affidavit stated that:

ADAMS and COSGROVE[] told GRIS-SOM that LARRY BRIDGES is going to be the new borrower on the property if they are forced out by MORGAN and BRIDGES will receive financing through a MORGAN financial institution. ADAMS further told GRISSOM that MORGAN has a viable tenant for the future finished development. Based on GRISSOM’s prior experiences with TED EHNEY and LARRY BRIDGES, GRISSOM believes that MORGAN will lend money to BRIDGES where there is a viable tenant for the development and MORGAN or a MORGAN partnership will receive an interest in the completed project. When the property is developed, it will be made to appear that MORGAN purchased an ownership interest, when in reality it was given to him by BRIDGES [Emphasis added].

80. What Grissom actually told the FBI concerning the property was that he had heard rumors that the 127th & Antioch property might be available for purchase and that Bridges might have a potential tenant interested in the property. In response to the hypothetical posed by the FBI, Grissom speculated that the property might be foreclosed upon, that Bridges might buy the property, that he might borrow funds from a Morgan-related institution, and that the “kickback” scenario allegedly outlined by Eh-ney and described in Paragraph 14 of the June 5 affidavit could play out with respect to this property. Tr. 2403-04; Tr. [10/18/93 (am)] 54-55, [10/19/93] 57-59, 70-71.

81. Grissom had no actual knowledge of any illegal activity in connection with this proposed fictional transaction. Tr. [10/18/93 (am) ] 59. Moreover, the FBI was aware that Grissom was no longer employed by Executive Hills North and no longer enjoyed any special access to current information with regard to Bridges’ ongoing and future financial dealings.

b. Findings of Fact Regarding the Standstill Agreement Referenced in the June 5 Affidavit

82. In April 1990, the $26.95 million Executive Hills North construction loan was in default and Home Savings took a deed in lieu of foreclosure which extinguished Executive Hills North’s debt to Home Savings and Home Savings title to the property. Tr. 216-17. Home Savings then determined that Eh-ney’s personal guaranty on the loan was un-collectible, but that Bridges’ guaranty was collectible. Tr. [9/3/93] at 112.

83. One of the Executive Hills North buildings securing the loan was vacant and required substantial finishing cost before a tenant could occupy it. Tr. 862-64.

84. Recognizing that the value of Home Savings’s newly acquired property could improve dramatically if it were leased and properly managed or sold, Home Savings entered into a “Standstill Agreement” with Bridges on April 10, 1990. Tr. [9/3/93] 112-13; DX 504.

85. Bridges, at that time, was engaged in the business of managing commercial property in the Kansas City area and was qualified to perform the services contemplated by the Standstill Agreement. Tr. 866.

86. The Standstill Agreement established $8,000,000 as an agreed-upon deficiency for which Bridges would be liable under his guaranty. The Standstill Agreement further limited Bridges’ defenses in any suit to enforce the guaranty. The Standstill Agreement also called for Bridges to manage the building without compensation and attempt to lease it to a tenant. In exchange, Home Savings agreed to forego any attempt to enforce Bridges’ guaranty for a period of two years. Tr. [9/3/93] 113-14, [9/7/93] 50-54; DX 504, DX 505.

87. If the building were leased, Home Savings’ exposure accordingly would be reduced. Absent the Standstill Agreement, Home Savings would have had to pay for management services in order to lease the building. In addition, the Standstill Agreement preserved Home Savings’ right to enforce Bridges’ guaranty, limited Bridges’ defenses in any suit to enforce his guaranty, and fixed the amount of Bridges’ potential liability under his guaranty, thereby eliminating any need to litigate that issue in the event of a lawsuit. Tr. 353-54, 862-65, 869-70; Tr. [9/3/93] 113-14, 149, 156-57, [9/7/93] 7-8.

88. Although Paragraph 28(e) of the June 5 Affidavit stated that the OTS “discovered” the Standstill Agreement while reviewing the loan file, the OTS was informed of the Standstill Agreement at the time Home Savings entered into it. Upon learning of the Standstill Agreement, the OTS did not find it to be detrimental to the institution, and raised no objection to it at the time it was entered. Tr. 854, 874-75; Tr. [9/3/93] 115-16, 854-55, 871-73. This information was conspicuously omitted from the June 5 Affidavit.

89. The OTS informed the FBI that the Standstill Agreement benefited Home Savings, that it was not unusual for a financial institution to “work something out with [the] borrower” in this type of situation, and that Bridges could perform his obligations under the guaranty. Tr. 67, 321-22, 326, 354, 728-30, 852, 860-61. This information additionally was not included in the June 5 Affidavit.

90. Paragraph 28(e) of the June 5 Affidavit stated that “[ajccording to USERA [OTS examiner], if Home Savings sues BRIDGES [on his guaranty], this would place BRIDGES in a very precarious financial condition.” This statement inferred that the Standstill Agreement was designed to forestall inquiry into Bridges’ financial condition and partnership interests and was therefore a part of the criminal scheme alleged in the June 5 Affidavit. Tr. 731, 728-30, 852; GX 61.

91. In May, 1991, the OTS was unsure of the details of the financial condition of Bridges. Tr. 860.

92. Paragraph 28(e) of the June 5 Affidavit stated that the “Standstill Agreement” provided a continuing benefit to Morgan, Dreiseszun, Ozar and Bridges. The evidence shows that Home Savings had been taken over by federal regulators nearly three months prior to the date of the June 5 Affidavit. Tr. 2537. Furthermore, Bridges was terminated as manager of the property on May 15, 1991. Tr. [9/7/93] 225-30; DX 524. Finally, as of June 5, 1991, the FBI knew that the RTC was considering repudiating the “Standstill Agreement,” Tr. 1210-11; Tr. [9/7/93] 227-29, and it was in fact terminated by the RTC on June 12, 1991. Tr. 227.

93. Paragraph 44(c) of the June 5 Affidavit stated that it is likely that “criminal discussions will continue at the Saturday meetings regarding ... the refinancing of the $26.95 million loan discussed in Paragraphs 28(c) through (g).” At the time this statement was made, the FBI knew that Home Savings had been seized by the RTC on March 15, 1991; that the $26.95 million loan had been foreclosed in 1990 when Home Savings took over the Executive Hills North property (thus making refinancing impossible as of June 5, 1991, Tr. 2076-2078) that Bridges had been terminated as manager of the property on May 15, 1991; that the RTC was considering repudiating the Standstill Agreement; and that Bridges’ earlier offer to buy the property had terminated on April 8, 1991 and that Bridges had not made any subsequent offers to buy the property.

C. FINDINGS OF FACT REGARDING THE “NECESSITY” FOR COURT ORDERED ELECTRONIC SURVEILLANCE IN THIS INVESTIGATION

94. Although the June 5, 1991 Affidavit stated that the affiant had “participated in the investigation of the offenses set forth [t]herein since October 1989,” the FBI investigation of Morgan, Ozar, Dreiseszun and Bridges did not really begin until early 1991 when the FBI received the OTS criminal referral. Tr. 2254.

95. After receiving advance notice from OTS that a criminal referral would be made concerning the defendants, Tr. 2279, 2282, 2294, but before actual receipt of the OTS criminal referral, the FBI conducted physical surveillance of Morgan on two occasions, Tr. 2284-85; DX 407A at 187-194, and prepared a background memorandum based in large part on a series of newspaper articles appearing in the Kansas City Star in March, 1990. Tr. 2286-88, 3464-66; GX 2-7; DX 407A at 195-204.

96. The FBI received the OTS criminal referral on February 12,1991. Tr. 2294; GX 8. Between that date and April 18,1991, the FBI’s investigation of the potential offenses described in the June 5 Affidavit consisted of four interviews of Randy Nay, Tr. 2300-10, 2315-17, 2321-24, 2326-27, 2329-30; DX 407A at 210-11, DX 407A at 225; two interviews of Grissom, Tr. 2312-13, 2325; DX 407A at 213-17, DX 554C, DX 554D, DX 554E, and one attempted consensual monitoring of a conversation between Grissom and Bridges. Tr. 2325-26, 2328-29; DX495.

97. At a meeting on April 18, 1991, the FBI decided to seek court authorization for electronic surveillance. Tr. 28-29, 154-55, 1851-54, 3307. Between this meeting and June 5, 1991, the FBI’s investigative effort involved actions geared only to obtaining the electronic surveillance authorization.

98. Prior to the June 5 Affidavit, the FBI had not conducted any kind of a thorough review of the business records of defendants. FBI agents testified that no business records were subpoenaed prior to the June 5 Affidavit because the FBI did not believe such records would show the full scope of the alleged conspiracy. Further, the FBI was concerned that a subpoena might tip off the defendants as to the existence of the investigation. Tr. 1988.

99. The FBI did not seek grand jury subpoenas for the records described in the OTS criminal referral because the OTS had already obtained those supporting records. Tr. 53.

100. In conducting its investigation prior to seeking court approval for electronic surveillance, the FBI chose not to interview a large number of available witnesses, including: Adams, Cosgrove, (who the June 5 Affidavit indicated had information concerning on-going criminal activity of defendants with respect to the property at 127th and Antioch); Larry Vohland (Executive Hills accountant); Sandra Funderburke (Executive Hills’ accounting manager); Leland Gerhart (President of Home Savings); Larry McLe-non (President of Valley View State Bank and a person who may have had information concerning any on-going criminal activity of defendants with respect to the property at 127th and Antioch); David Skidgel (an RTC attorney who may have had information concerning any on-going criminal activity of Bridges with respect to the Standstill Agreement); and assorted Federal Reserve Bank and FDIC regulators. Tr. 87-88, 1218,1981, 2442-43, 2476, 3431-32.

D. FINDINGS OF FACT REGARDING THE DEGREE OF MINIMIZATION OF INTERCEPTIONS EMPLOYED BY THE FBI DURING THE SURVEILLANCE IN THIS INVESTIGATION

101. Written minimization instructions provided to monitoring agents conducting video and audio surveillance at M-D Management provided:

The Orders of the Court only authorize the interception ... of conversations and nonverbal conduct of [defendants] ... regarding offenses involving Title 18, United States Code, Sections 371 (Conspiracy), 1344 (Bank Fraud) and 2314 (Interstate transportation of stolen property).

Agents may spot monitor for a reasonable period not to exceed two minutes to determine whether the subject is present and participating in a conversation. This spot monitoring may occur as often as is reasonable, but in any event at least one minute should elapse between interceptions.

* % * % *

If the subject is engaged in conversation, interception may continue for a reasonable time, usually not in excess of two minutes, to determine whether the conversation contains criminal activities.

If such a conversation is unclear but may be related to bank fraud, interstate transportation of stolen property or conspiracy involving these offenses, interception may continue until such time as it is determined that the conversation clearly no longer relates to that topic.

Tr. 2578-A, 2581-82, 2652; GX 89 ¶¶3, 5(a).

102. Monitoring agents generally adhered strictly to the “two minutes up and one minute down” minimization instruction. Tr. 2931, 3502.

103. The telephone minimization instructions set forth no specific monitoring parameters, but left the decision whether or when to suspend minimization to the discretion of the monitoring agents. Tr. 3089-90.

104. Prior to the initiation of the electronic surveillance, the FBI understood that the targets of the investigation routinely discussed highly sophisticated financial and real estate transactions. Tr. 2720-21. In the course of conducting surveillance, monitoring agents experienced difficulty in determining pertinent conversations from non-pertinent conversations, due to the simple fact that most of the surveillance involved, in some fashion, discussions of complex financing and real estate transactions. Tr. 3099. On numerous occasions, agents intercepted non-pertinent conversations for periods in excess of two minutes because they did not understand the substance of the conversations monitored or whether the conversation related to the subject matter of their investigation.

105. With the exception of a briefing on the investigation and the nature of the transactions involved, monitoring agents received no special training prior to the commence-' ment of the electronic surveillance to enable them to understand the monitored conversations and, thereby, discern between criminal and non-criminal conversations. Tr. 371-74, 451-53.

106. The complex nature of the discussions became evident on the very first day of monitoring. Tr. 2724. Agents who felt comfortable with their background in finance and real estate transactions at the start of the surveillance quickly concluded that the conversations involved highly sophisticated and complex financial transactions that were beyond their ready understanding. Tr. 2724.

107. To address the difficulties monitoring agents were experiencing in understanding the intercepted conversations, the FBI requested that the supervising Assistant United States Attorney extend spot monitoring period beyond two minutes. Tr. 364-71, 2573, 2580-81. This request was refused. Tr. 364-73, 2580-81.

108. Because the monitoring agents did not understand the nature of the conversations being intercepted, agents intercepted many privileged, and non-pertinent conversations. Many of these “innocent” conversations were intercepted for periods in excess of two minutes. Tr. 2649.

109. Wiretaps were in place on five telephone lines at M-D Management from September 27, 1991 through November 23, 1991. Tr. 3095. With respect to these telephone wiretaps, a total of 8126 minutes were intercepted. Of this total, the number of minutes of pertinent conversations was 223, or, in other words, only 2.75% of the total calls were deemed to be pertinent. Tr. 3155; GX 120.

110. The agents relied on Paragraph 5(a) of the written minimization instructions as justification for monitoring conversations for periods in excess of two minutes. Tr. 2844-45. Monitoring agents testified that they believed the language of Paragraph 5(a) allowed them to monitor for more than two minutes any time they did not understand the substance of a conversation, rather than only when it was “unclear” as to whether criminal activity was being discussed. Tr. 2844-45. For example, monitoring agents testified that interception could extend beyond two minutes to determine if the conversation was criminal anytime the conversation was about “bank type stuff.” Tr. 2844-45.

111. Prior to the commencement of electronic surveillance at M-D Management, the FBI was aware of the potential for the interception of attorney-client privileged communications inasmuch as the FBI fully anticipated that Morgan and his business associates were then represented by attorneys. Tr. 1458.

112. Prior to the commencement of electronic surveillance, there were no discussions among the monitoring agents concerning the identity of any attorneys who may have been representing the targets. Tr. 2585.

113. During the monitoring, FBI agents discussed concerns about intercepting attorney-client conversations and there were specific discussions about the fact that so many of the conversations intercepted involved attorneys. Tr. 1064.

114. The minimization instructions given to FBI agents monitoring the video and audio surveillance provided:

No conversation may be intercepted that would fall under any legal privilege ... described below:

Attorney-Client Privilege:

Never knowingly listen to or record a conversation between a subject and his or her attorney when other parties are not present. If it is determined that a conversation involving an attorney constitutes legal consultation of any kind, notify the case agent, shut off the monitor and stop recording, unless you are able to determine from the interception of any conversation involving an attorney that third parties who are not involved in the legal matters being discussed are present....

Tr. 1451; GX 89 ¶7.

115. Monitoring agents understood these instructions to mean that, even if an attorney was present during a conversation and legal matters were being discussed, agents were permitted to spot monitor the conversation pursuant to the two minutes up and one minute down instruction. Tr. 2893-95.

116. The FBI claimed that June 21, 1991 was the earliest date by which they knew R.J. Campbell was an attorney representing Morgan, Ozar and Dreiseszun.

117. On June 6, 1991, and June 13, 1991, newspaper articles discussing the an FBI investigation of Morgan appeared in the Kansas City Star. These articles expressly identified R.J. Campbell as an attorney representing Morgan. These articles were placed in the FBI files relating to the investigation of defendants. DX 480, DX 538, DX 539, DX 540, DX 541.

118. On Saturday, June 15,1991, the FBI intercepted a conversation involving R.J. Campbell and Morgan. DX 406A. This conversation was monitored for approximately 38 minutes. Furthermore, at one point, this conversation was intercepted for over 31 minutes without minimization. GX 85A; DX 406A. Based on the substance of this conversation, it unambiguously appeared that Campbell was an attorney representing Morgan and that legal matters were being discussed. DX 406A.

119. On June 17, 1991, FBI agents appeared before the issuing federal district court to present their first 10-day report to the court. During this meeting the district judge expressly advised the FBI agents that R.J. Campbell was an attorney. Tr. 3358, 3507-09.

120. On June 21, 1991, FBI agents attempted to serve a grand jury subpoena on Mark Morgan at the offices of M-D Management. Tr. 3518; DX 407B at 430-31. In response, R.J. Campbell contacted the FBI on June 21, 1991 and spoke with an FBI agent. During that telephone conversation, Campbell advised the FBI that he represented Frank Morgan. In response to direct questions by the FBI agent concerning whether Campbell represented Mark Morgan, Dreiseszun, and Ozar, Campbell stated that he also represented those individuals. DX 407B at 430. The FBI agent did not ask Campbell whether his legal representation extended to Larry Bridges, David Feingold or any other persons. Tr. 2815-19; DX 407B at 430-31.

121. Following this conversation, monitoring agents were advised that conversations involving Campbell were not to be monitored unless they could determine through “spot-checks” that criminal activity was being discussed or if a third-party not known to be represented by Campbell was present. Tr. 2589, 2895-96; GX 83 at 518.

122. Even though the FBI knew that R.J. Campbell was an attorney who represented Frank Morgan and at least two other named targets of the investigation, the FBI monitored a conversation in which Campbell was a participant on June 22,1991. GX 85A; DX 406N. This conversation clearly involved legal matters and lasted approximately 55 minutes. GX 85A; DX 405K; DX 406N.

123. The FBI’s reason for monitoring this conversation was that third-parties not known to be represented by Campbell — Tom Morgan and Larry Bridges — were present. Tr. 3513-14; GX 83 at 3. During the June 21, 1991 telephone conversation with the FBI, Campbell had not been asked by the FBI agent whether he represented Tom Morgan and Larry Bridges. This inquiry was not made despite the fact that Bridges was a target of the investigation and Tom Morgan was defendant Morgan’s son and Campbell had advised the FBI that he represented Morgan’s other son, Mark Morgan. When Campbell was ultimately informed that Bridges and Feingold were targets of the investigation, he immediately advised the Government that he represented both individuals. Tr. at 2819-20; GX 83 at 3-4.

124. Even though the FBI made no independent effort to determine who Campbell represented, unless Campbell had formally and personally advised the Government of the existence of an attorney-client relationship between himself and all others present for a particular conversation, the monitoring agents proceeded on the assumption that no attorney/client relationship existed. Tr. 2820, 3514-15.

125. A subsequent affidavit, in support of the extension of the electronic surveillance at M-D Management, alleged that there was probable cause to believe that Campbell was involved in criminal conversations with Morgan and the other targets of the investigation. GX 99. Based on this affidavit, the issuing federal district court named Campbell as an additional subject of the electronic surveillance and authorized the FBI to monitor conversations to which Campbell was a party. DX 401J, 401L.

126. The underlying basis for the allegations against Campbell stemmed from part of the conversation between Campbell and Morgan monitored by the FBI on June 15 during which the FBI believed Campbell and Morgan were discussing an illegal loan transaction. GX 99 ¶ 31. In this particular conversation Campbell and Morgan were discussing financing a loan on a property that was subject to a “wrap mortgage.”

127. The term “wrap mortgage” does not appear in the affidavit submitted to the Court seeking to add Campbell as an inter-ceptee, (GX 99) because the FBI did not consider the use of the term “wrap mortgage” to be pertinent to the conversation. In that conversation, Campbell referred to the transaction as a “tricky loan” and indicated that “the borrower is not the owner.” These statements led the FBI to believe that the transaction Campbell and Morgan were discussing was the same type as those discussed in the June 5 Affidavit. Tr. 2032-33.

128. A “wrap mortgage” is a real estate term of art describing a transaction in which the seller of property does not pay off the mortgage, but retains the obligation to do so. As a result, a person seeking to borrow funds to pay off a “wrap mortgage” would not be the owner of the property.

129. In making the affidavit seeking to add Campbell as a named interceptee, the affiant did not know or understand the meaning of the term “wrap mortgage.” Tr. 2454, 2458-59.

130. Because no conversations involving criminal activity on the part of Campbell were intercepted during the following 30 days that he was a subject of the electronic surveillance, Campbell was dropped as a named interceptee when the electronic surveillance was extended on August 2, 1991. Tr. 2594-95.

131. On June 22,1991, the FBI intercepted a conversation between attorney Anthony Luppino, Frank Morgan, Sherman Dreisesz-un, and David Feingold. GX 85-A; DX 405K. During this conversation, Luppino explained the tax implications of various transactions and the optimum way to structure a transaction for tax purposes. DX 406L. The conversation with Luppino lasted approximately 55 minutes, with approximately 50 minutes being intercepted. GX 85A. The substance of this conversation gave a strong indication that Luppino was an attorney and that legal matters were being discussed.

132. The monitoring agent who intercepted this conversation testified that there was no apparent criminality involved in this conversation. Nonetheless, the agent thought the conversation might be pertinent. Tr. 3485-86, 3489-90.

133. After intercepting this conversation, the FBI took no steps to determine Luppi-no’s identity because it assumed him to be an accountant. Tr. 3490-91. On the following Saturday, June 29, 1991, several minutes of another conversation involving Luppino were intercepted. Tr. 3496