.04/10) Application for a Search Warrant FILED U NITED STATES D ISTRICT COURT Akg 2 ! 20 for the x u ou uux cuu W estena District of Virginia BY; tl-rY CLERK ln the Matter of the Search of (Briefly describe the property to be searched or ident# the person by name and address) 1057 Bill Tuck Highway, Building B, Suite 239 and Suite 217 South Boston, Virginia 24592 . 134 T z/ C ase No. . APPLICATION FOR A SEARCH W ARM NT 1, a federal law enforcement oftice!- or an attorney for the government, request a search warrant and state under penalty of perjury that l have reason to belleve that on the following person or property (identh the person or describe the property to be searched and give its locationl: See Attachment A located in the Western District of Virginia , there is now concealed (identh the person or describe the property to be seizedll See Attachment B The basis for the search under Fed. R. Crim. P. 41(c) is (checkone or morel'. V evidence of a crime', Vcontraband, fruits of crime, or other items illegally possessed; Yproperty designed for use, intended for use, or used in committing a crime; O a person to be arrested or a person who is unlawfully restrained. The search is related to a violation of: Code Section 18 U.S.C. j 2342 (b) 18 U.S.C. j 1957 26 U.S.C. j 5762(a)(3) The application is based on these facts: see attached affidavit, Attachment A # Continued on the attached sheet. Offense Description Contraband Cigarette Trafficking Act Money Laundering Tax Evasion O Delayed notice of days (give exact ending date if more than 30 days: ) is requested under l 8 U.S.C. j 3 l 03a, the basis of which is set forth on the attached sheet. / Applicant 's signature ' eq G IGTGAJS spigctwt- h%c+ar Printed name and title Sworn to before me and signed in my presence. Date: 7 / v I-'Q /2 F City and state: Roanoke, Virginia Judge 's nknature Robert S. Ballou, United States Magistrate Judge Printed name and title Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 1 of 15 Pageid#: 1 CLERKS OFFICE U,S. DISX COUG AT ROANOKE, VA FILED ALC 2 1 2913 JUL DU LEY CLERK BY; PUTY CLERK IN THE UNITED STATES DISTRICT COURT FOR THE W ESTERN DISTRICT OF VIRGINIA IN TllE M ATTER OF THE SEARCH OF; The Premises at 1057 Bill Tuck Highway, Building B, Suites 239 and 217 South Boston, Virginia 24592 ) V:13$ Tll AFFIDAVIT IN SUPPORT OF SEARCH W ARRANT 1, Special Agent Robert E. M artens, being duly sworn herby depose and say: INTRODUCTION I have been employed as a Special Agent (SA) with the lnternal Revtnue Service (IRS), Crim inal lnvestigation Division for 9 years. For the last approximately 2.5 years, l have been detailed to the Alcohol Tobacco Tax and Trade Bureau (TTB). As a Special Agent with lRS my duties include, but are not lim ited to, conducting criminal investigations concerning violations of the Internal Revenue Code, money laundering, the bank secrecy act, and m ore recently violations regarding tobacco diversion including the Contraband Cigarette TrafGcking Act. 2. As a result of m y personal participation in the investigation of matters referred to in this affidavit, l am fam iliar with the facts and circumstances of this investigation. On the basis of personal observation, as well as familiarity, I have determined the following: For the past 12 months your affiant has been involved in an investigation of Kathryn C. Farley, CB Holdings LLC, Firebird M anufacturing LLC, a cigarette m anufacturing in the W estern District of Virginia, and Cherokee Tobacco Company LLC, for a conspiracy to fail to pay the Federal excise tax on cigarettes that Firebird M anufacturing LLC manufactures. Based on my investigation, there is probable cause to believe that Kathryn C. Farley, President of both Firebird M anufacturing LLC and Cherokee Tobacco Company LLC, owned by CB Holdings LLC is involved in a conspiracy to commit wire fraud, conspiracy to com mit money laundering, and conspiracy to violate the Contraband tl d . / > .J' Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 2 of 15 Pageid#: 2 Cigarette Trafficking Act. Your affiant bases this affidavit upon personal knowledge, information obtained from the review of official records, public records, and information filed with TTB. 4. This affidavit is submitted in support of an application for a search warrant for Firebird M anufacturing LLC and Cherokee Tobacco Company LLC, 1057 Bill Tuck Highway, Building B, South Boston, Virginia 24592; and 1057 Bill Tuck Highway Suite 239, South Boston, Virginia 24592, which is further described in Attachment A. BACK GROUND The Alcohol Tobacco Tax and Trade Bureau (TTB) administers and enforces laws and TTB regulations pertaining to producing tobacco products and for collecting excise taxes on tobacco. 6. The Contraband Cigarette Trafticking Act (CCTA) requires that any person who sells, ships, transfers or otherwise disposes of more than 10,000 cigarettes in a single transaction maintain records of the transaction that state the full name of the purchaser, the street address (including city and sute) to which the cigarettes were destined, and the quantity of the cigarettes in question. The CCTA makes it illegal for any person knowingly to make any false statement or representation with respect to the information required to be kept in the records of any person who ships, sells, or distributes any quantity of cigarettes in excess of l 0,000 in a single transaction. 7. Proper and truthful record keeping and documentation as mandated by federal law and regulations are essential to enable TTB to perform its function with regard to record keeping of operations and transactions by cigarette manufacturers. False record keeping impedes perform ance of TTB'S function and unduly hinders the effective administration ofjustice. 8. It is unlawful under Federal law to conspire to impede a federal agency's perform ance of its function or unduly hinder the administration of justice, falsify records or make false statements concerning a matter under thejurisdiction of a federal agency, including IRS and TTB, evade Federal Cigarette Excise Taxes or to use the mails or wires in furtherance of a scheme to defraud. 9. Firebird M anufacturing, LLC, is a corporation organized and existing under the laws of Virginia, and has manufactured Cherokee brand cigarettes since purchasing the manufacturing facility from Virginia Brands, LLC, in early 2010. Firebird M anufacturing, LLC, has also manufactured Sem inole and Palmetto brand cigarettes 2 / yu / ( / $J? Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 3 of 15 Pageid#: 3 during that time frame. Firebird is located at 1057 Bill Tuck Highway, Building B, South Boston, Virginia 24592, within the W estern District of Virginia. Cherokee Tobacco LLC is a wholesaler of tobacco products and is located at 1057 Bill Tuck Highway, Suite 239, South Boston, Virginia 24592, within the W estern District of Virginia. 10. Firebird Manufacturing is a TTB permitted Manufacturer of Tobacco Products (MTP), permit number TP-VA-15004. l 1. Title 26, United States Code, j 5701(b) imposes a tax on tobacco products manufactured in the United States. On cigarettes weighing not more than 3 pounds per thousand, the tax is $50.33 per thousand, or $10.066 per carton. 12. In 1998, forty-six states and six territories entered into a M aster Settlement Agreement (MSA) with several major cigarette manufacturers. The parties intended the settlement to end further litigation between state governm ents and cigarette manufacturers. As part of the settlement, the states released the manufacturers from past and future liability in exchange for the m anufacturers' agreement to abide by advertising and promotional restrictions and to m ake annual moneury payments to the states based on annual cigarette sales. Under the settlement, the manufacturers' payments to the States were subject to reduction based on lost market share, but the paym ent was not reduced if the State enacted and enforced a Iaw that required cigarette manufacturers that were not parties to the Master Settlement Agreement (Non-participating Manufacturers) to make specifed annual deposits into an escrow fund based on the number of the m anufacturer's cigarettes sold in the state, as measured by state excise taxes applied to such cigarette sales. The states' Iaws also required that such manufacturers file annual certifications truthfully stating that the required escrow deposits were made. l3. Firebird Manufacturing LLC, is a Non-participating Manufacturer (NPM) of the Cherokee cigarette brand for a related company, Cherokee Tobacco Company, and several private label brands of cigarettes, cigars and pipe tobacco. In order to be profitable, Cherokee cigarettes sold to wholesalers in M SA states must include escrow payments in the sale price to wholesalers who will stamp and sell Cherokee cigarettes. 14. Title 26, United States Code, j 5703(a)(1) provides that the manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by Section 5701 . 15. Title 26, United States Code, j 5703(b)(1) provides that the taxes imposed by Section 5701 shall be determ ined at the tim e of removal of the tobacco products and cigarette papers and tubes, that such taxes shall be paid on the basis of a return, that the Secretary 3 o/ ? ('% ylM Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 4 of 15 Pageid#: 4 shall, by regulations prescribe the period or the event for which such return shall be made and the information to be furnished on such return. 16. Title 26, United States Code, j 57624a) states that whoever, with the intent to defraud the United States: (2)...Fai1s to keep or make any record, return, reporq or inventory, or keeps or makes any false or fraudulent record, return, report, or inventory required by this chapter or regulations thereunder; or (3)...Refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the paym ent thereof; or (4)...Removes, contrary to this chapter or regulations thereunder, any tobacco products or cigarette papers or tubes subject to tax under this chapter: Shall, for each such offense, be fined not more than $10,000, or imprisoned not more than 5 years or both. 17. Title 26, United States Code, j 5741 , provides that every manufacturer of tobacco products or cigarette papers and tubes, every importer, and every export warehouse proprietor shall keep such records in such a manner as the Secretary shall by regulation prescribe. The records required under this section shall be available for inspection by any internal revenue officer during business hours. 18. Title 26, United States Code, j 5705, provides that Credit or refund of any tax imposed by this chapter or section 7652 shall be allowed or made (without interest) to the manufacturer, importer, or export warehouse proprietor, on proof satisfactory to the Secretary that the claimant manufacturer, importer, or export warehouse proprietor has paid the tax on tobacco products and cigarette papers and tubes withdrawn by him from the market; or on such articles lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession of ownership of the claimant. 19. Title 18, United States Code, j 1957 states: Whoever... knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity. 20. 27 CFR 40.181, provides that every manufacturer of tobacco products m ust keep records of his operations and transactions which shall reflect, for each day, the information specified in 40.182 and 40.183. For this purpose day shall m ean calendar day. .. 27 CFR 40.185, Retention of records, provides that al1 records required to be kept under this part, including copies of authorizations, claims, inventories, notices, reports, returns 4 f-/ $ ) P sj t Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 5 of 15 Pageid#: 5 and schedules, shall be retained by the manufacturer for three years following the close of the calendar year in which filed or made, or in the case of an authorization, for three years following the close of the calendar year in which the operation under such authorization is concluded. Such records shall be kept in the factory or a place convenient thereto, and shall be made available for inspection by any TTB offker upon his request. STATEM ENT OF FACTS 22. Firebird Manufacturing LLC, (Firebird) is a manufacturer of tobacco products located in South Boston, Virginia that at least from M arch 2010 to July 2013, manufacmred Cherokee brand cigarettes as well as other cigarettes and filtered cigars. Cherokee Tobacco Company LLC, is a wholesaler of tobacco products that primarily sells the cigarettes manufactured by Firebird. During this tim e, Kathryn Farley started as Vice President and in June 2012 was promoted to President of both Firebird and Cherokee Tobacco Company LLC. Firebird's manufacturing plant is located at 1057 Bill Tuck Highway, Building B and Suite 239, South Boston, Virginia, located in the W estern District of Virginia. 23. Cooperating Witness //1 (CW#1) contacted TTB in June of 2012 and has been and continues to be a highly reliable source of information. Information provided by CW #1 has been corroborated by records filed with TTB and other cooperating witnesses. 24. On September 14, 201 1 TTB authorized Firebird to destroy 3,792,800 sticks of cigarettes. After the product was destroyed, Firebird filed a claim of $190,891.62 for the Federal Excise Tax (FET) on these products. 25. Firebird claimed the cigarettes were returned for a variety of reasons m ostly due to quality issues on cigarettes m anufactured since Firebird started business in M arch 2010. 26. A TTB Auditor witnessed the destruction on October 7, 201 l . The number of sticks was reduced to 3,750,760 and the tax amount adjusted to $188,775.75. The claim for a Federal Excise Tax refund was denied as an audit team did not feel the documentation supplied was sufficient. 27. After the destruction CW #1 contacted TTB. CW #1 claimed Firebird had planned to destroy oId product they had not manufactured or paid taxes on, but when TTB wanted to witness the destruction they changed the product and altered records given to TTB. 28. CW #1 stated that Firebird planned to destroy imported product and old product from the manufacturer they had purchased. CW #1 stated that once notified TTB would observe 5 43 J' *1 s / Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 6 of 15 Pageid#: 6 the destruction the product was switched out for new product and the destruction team ordered to go slow. Firebird would not have been eligible for a tax refund associated with the destruction of product manufactured or imported by the previous manufacturer, to be eligible for a tax refund, Firebird would need to destroy product that they had manufactured since the purchase of the manufacturing facility in M arch 2010. 29. CW #1 stated that Firebird pulled new product to destroy in order to conceal the old product they planned to destroy, but the new product they destroyed did not match invoices from M arch 2010 when they began manufacturing. Firebird destroyed Cherokee M enthol Gold Kings but the invoices they were planning on using for support had M enthol Green and M enthol Gold 100s and M enthol Green Kings. CW #l produced original invoices and altered invoices to show changes that had been made. 30. Firebird's QuickBooks files were obtained during a civil audit conducted by TTB in November 201 1. The records were kept at the place to be searched. A review of the QuickBooks's Audit Trail file showed that the invoices provided by CW#1 showed that the invoices provided by CW #l had been altered on October l2, 20l l , after the TTB auditor asked for supporting documents. 31 . Starting in November 201 1, the amount of tax reported on and paid per Firebird's tax returns was less than the amount of tax due based on a calculation of the removals on the monthly reports. 32. The TTB Monthly Reports, Form 5210.5, are filed and signed, under penalty of perjul.y by Kathy Farley, and report manufacture and removal information for the manufacturer. 33. CW #1 stated that office personnel prepare the TTB M onthly Reports, Form 5210.5, based upon the manufacture and removal information provided to CW #1, and provides the report for filing to Farley. 34. The federal excise tax returns, filed twice a month, and three times in September, are filed electronically through a user account established by Farley. 35. Using the monthly report of removals filed with TTB the tax due for the month was recalculated using the Removed Subject to Tax line of the monthly report. This figure was then reconciled to the tax returns filed by Firebird for the corresponding period. The figure should match, however since November 201 1 the tax payment has been far less than the tax Iiability calculated from the m onthly reports. 6 6 #/ i / t!# Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 7 of 15 Pageid#: 7 36. The tax liability associated with the underpaym ent from November 201 1 through July 2013 is approximately 10.8 million dollars. 37. CW #1 also stated that office personnel complete a tax calculation and prepare draft TTB Excise Tax Returns, which are provided to Farley. CW #1 was able to provide the draft returns provided to Farley by office personnel for January 2013. The tax liability on the draft tax returns reconciles with the tax liability of the TTB M onthly report for the period. CW #1 stated that oftke personnel provide Farley with the draft tax returns based upon the monthly report. 38. 1 approached CW #2 in approximately October 2012. information in the past to multiple federal agencies. business. CW #2 has provided reliable CW #2 operates a tobacco wholesale 39. CW #2 has been providing documentary evidence as well as conducting consensually monitored phone calls on our behalf. Additionally CW #2 has met face to face with Farley in a monitored situation. 40. CW #2 operates in states that participate in the M SA. The M SA fee is approximately $5.80 a carton. The Federal Excise Tax is approximately $10.06 per carton. Thus if Federal Taxes and the M SA are paid, the regulatory costs and taxes on a carton of cigarettes is at least $15.86 a carton. 41. ln August of 2012 Kathy Farley offered to sell cartons of Cherokee cigarettes to CW #2 for $16 a carton. After three sales totaling 8,220 cartons, the price was reduced to $15 a carton. 42. For a1I the sales to CW#2 at $15 and $16 a carton, Farley created false documents to hide the true price. Farley invoiced CW#2 at a higher price, for example $19.95 a carton, then issued a credit memo to the company to reduce the price to approximately $1 8.25. Farley then drafts CW#2's account for a cost of approximately $1 8.25 a carton. Farley later wires funds back to CW #2 to reduce the effective price to $15 a carton. 43. Between August 1, 2012 and June 6, 2013 Farley sold cigarettes to CW #2 using the false invoicing schem e to sell cigarettes below the regulatory cost creating at least 32 false invoices, for a total of 2 10,600 cartons of cigarettes and drafted CW #2's account for a total of $4,201,470 and wired CW #2 return wires totaling $1,033,842. 44. Farley wired CW #2 funds to reduce and conceal his actual price on at least 15 occasions, where all but one occasion exceeded $10,000. 13 , ( 2 #l. 4/ Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 8 of 15 Pageid#: 8 45. As part of an undercover operation on M ay 22, 2013 and M ay 23 2013, CW #2 toured the manufacturing facility, the Firebird and Cherokee Tobacco offices, and met directly with Farley. W hile at the manufacturing facility, CW #2 noticed that Firebird appeared to have a large volume of raw materials. The evening of M ay 22, 2013, while at a party hosted by Cherokee Tobacco, Farley confirmed that CW#2 would continue to receive the $l5 a carton pricing. 46. Your affiant is also aware that in addition to documentary evidence records and other evidence of crimes are kept in digital format on computers and other electronic media. lt is the affiant's further experience that both physical and electronic evidence relating to transactions for tobacco manufacturing and wholesaling businesses are kept for lengthy periods of time, in order to respond to audits and for other business reasons. By law, tobacco manufacturers and wholesalers are required to maintain records for a period of three years. 47. Your affiant has examined land records, utility records, and business records for the locations to be searched, and has conducted surveillance of the locations to be searched. M y exam ination has determined that, as to each of the locations to be searched, it is a business location for the individuals described in paragraph three of this afGdavit. 48. The offenses described in this afsdavit are associated with persons and businesses that routinely keep records in paper, digital, and electronic forms. Individuals involved in fraud schemes, money laundering and CCTA violations maintain documents, letters and records relating to their illegal activities for long periods of time. This documentary evidence is usually secreted within their residences and the surrounding outbuildings; their vehicles; the residences of fam ily members, friends and associates; the places in which they conduct their business; or in storage areas. Regulations require that manufacturers of cigarettes maintain the required records for a term of three years. According to TTB and persons/entities in the industry the normal business practice for retention of records in the industry is even longer - a period of seven years. Based on the facts set forth in this affidavit it is believed that probable cause exist that records, fruits, instrumentalities, and evidence of a crime pertaining to the alleged offenses are maintained at the locations owned or occupied by the conspirators detailed in attachment A, which is incorporated and made a part of this Affdavit. DIGITAL EVIDENCE 49. As described above and in Attachment B, this application seeks permission to search for records that might be found on the PREM ISES, in whatever form they are found. One form in which the records m ight be found is data stored on a computer's hard drive or other storage m edia. Thus, the warrant applied for would authorize the seizure of electronic storage media or, potentially, the copying of electronically stored information, all under Rule 41(e)(2)(B). 8 l bl y l ) # Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 9 of 15 Pageid#: 9 50. Your affiant knows that Firebird and Cherokee Tobacco LLC are required by Federal law to keep records that relate to the business of cigarette manufacturing and that Firebird and Cherokee Tobacco keep records in both written and computer maintained dal. Your affant knows that Firebird m aintains its financial records in a computerized format since TTB was provided with computerized format during an audit in 20l 1 . 51 . lRS Special Agent-cls Robbie O'Brien is a Computer lnvestigative Specialist with the IRS and has specialized training and experience in investigations involving computer and other digital evidence. ClS O'Brien informed me that computer hardware, sohware, documentation, passwords, and data security devices may be important to a criminal investigation in 4 respects, they may: (l) contain contraband, (2) be an instrumentality of an offense, (3) be fruits of a crime, or (4) contain evidence of crime (items that are evidence or may have been used to collect and-store information about crimes) created, stored or maintained as electronic or digital data/information. Rule 41 of the Federal Rules of Criminal Procedure permits the government to search for and seize computer hardware, software, documentation, passwords, and data security devices which are (1) contraband, (2) instrumentality's, (3) fruits, or (4) evidence of crime. The computer and related media can be one or more of the aforementioned classifk ations. 52. Probable cause. l subm it that if a computer or storage medium is found on the PREM ISES, there is probable cause to believe those records will be stored on that computer or storage medium, for at least the following reasons: Based on m y knowledge, training, and experience, l know that computer files or remnants of such files can be recovered months or even years after they have been downloaded onto a storage medium, deleted, or viewed via the Internet. Electronic files downloaded to a storage medium can be stored for years at little or no cost. Even when files have been deleted, they can be recovered months or years later using forensic tools. This is so because when a person ''deletes'' a file on a computer, the data contained in the file does not actually disappear; rather, that data remains on the storage medium until it is overwritten by new data. Therefore, deleted files, or remnants of deleted files, may reside in free space or slack space-that is, in space on the storage medium that is not currently being used by an active file-for Iong periods of time before they are overwritten. ln addition, a computer's operating system may also keep a record of deleted data in a ''swap'' or ''recovery'' file. W holly apart from user-generated files, computer storage media-in particular, computers' internal hard drives-contain electronic evidence of how a computer has 9 ,' ) t Iz Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 10 of 15 Pageid#: 10 been used, what it has been used for, and who has used it. To give a few examples, this forensic evidence can take the form of operating system configurations, artifacts from operating system or application operation, file system data structures, and virtual memory ''swap'' or paging files. Computer users typically do not erase or delete this evidence, because special software is typically required for that task. However, it is technically possible to delete this information. Similarly, fles that have been viewed via the lnternet are sometim es autom atically downloaded into a temporary Internet directory or ''cache.'' 53. Forensic evidence. As further described in Attachment B, this application seeks permission to locate not only computer Gles that might serve as direct evidence of the crimes described on the warrant, but also for forensic electronic evidence that establishes how computers were used, the purpose of their use, who used them, and when. There is probable cause to believe that this forensic electronic evidence will be on any computer in the PREM ISES because: Data on the storage medium can provide evidence of a file that was once on the storage medium but has since been deleted or edited, or of a deleted portion of a file (such as a paragraph that has been deleted from a word processing filel. Virtual memory paging systems can leave traces of information on the storage medium that show what tasks and processes were recently active. W eb browsers, e-mail programs, and chat programs store configuration information on the storage medium that can reveal information such as online nicknames and passwords. Operating systems can record additional information, such as the attachment of peripherals, the attachment of USB tlash storage devices or other external storage media, and the times the computer was in use. Computer file systems can record information about the dates files were created and the sequence in which they were created. Forensic evidence on a computer or storage medium can also indicate who has used or controlled the computer or storage medium . This ''user attribution'' evidence is analogous to the search for ''indicia of occupancy'' while executing a search warrant at a residence. For example, registry information, configuration files, user profiles, e- mail, e-mail address books, ''chat,'' instant messaging logs, photographs, the presence or absence of malware, and correspondence (and the data associated with the foregoing, such as file creation and last-accessed dates) may be evidence of who used or controlled the computer or storage medium at a relevant tim e. A person with appropriate familiarity with how a computer works can, after examining this forensic evidence in its proper context, draw conclusions about how computers were used, the purpose of their use, who used them, and when. 10 ) W ' ) (l Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 11 of 15 Pageid#: 11 The process of identifying the exact files, blocks, registry entries, logs, or other forms of forensic evidence on a storage medium that are necessary to draw an accurate conclusion is a dynamic process. W hile it is possible to specify in advance the records to be sought, computer evidence is not always data that can be merely reviewed by a review team and passed along to investigators. W hether data stored on a computer is evidence may depend on other inform ation stored on the computer and the application of knowledge about how a computer behaves. Therefore, contextual information necessary to understand other evidence also falls within the scope of the warrant. Further, in finding evidence of how a computer was used, the purpose of its use, who used it, and when, sometimes it is necessary to establish that a particular thing is not present on a storage medium . For example, the presence or absence of counter- forensic programs or anti-virus programs (and associated data) may be relevant to establishing the user's intent. 54. Necessity ofseizing or copying entire computers or storage media. In most cases, a thorough search of a premises for information that might be stored on storage media often requires the seizure of the physical storage m edia and later off-site review consistent with the warrant. In lieu of removing storage media from the premises, it is sometimes possible to make an image copy of storage media. Generally speaking, imaging is the taking of a complete electronic picture of the computer's data, including al1 hidden sectors and deleted files. Either seizure or imaging is often necessary to ensure the accuracy and completeness of data recorded on the storage m edia, and to prevent the loss of the data either from accidental or intentional destruction. This is true because of the following: a. The tim e required for an examination. As noted above, not all evidence takes the form of documents and files that can be easily viewed on site. Analyzing evidence of how a computer has been used, what it has been used for, and who has used it requires considerable time, and taking that much time on premises 11 l f 4) ' Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 12 of 15 Pageid#: 12 could be unreasonable. As explained above, because the warrant calls for forensic electronic evidence, it is exceedingly likely that it will be necessary to thoroughly exam ine storage media to obtain evidence. Storage media can store a large volume of information. Reviewing that information for things described in the warrant can take weeks or months, depending on the volume of data stored, and would be impractical and invasive to attempt on-site. b. Technical reguirements. Computers can be configured in several different ways, featuring a variety of different operating systems, application sohware, and contigurations. Therefore, searching them sometimes requires tools or knowledge that might not be present on the search site. The vast array of computer hardware and software available makes it difficult to know before a search what tools or knowledge will be required to analyze the system and its data on the Premises. However, taking the storage media off-site and reviewing it in a controlled environment will allow its exam ination with the proper tools and knowledge. Varietv of form s of electronic media. Records sought under this warrant could be stored in a variety of storage media formats that may require off-site reviewing with specialized forensic tools. 55. Nature ofexamination. Based on the foregoing, and consistent with Rule 41(e)(2)(B), when persons executing the warrant conclude that it would be impractical to review the media on-site, the warrant l am applying for would permit seizing or imaging storage media that reasonably appear to contain some or al1 of the evidence described in the warrant, thus permitting its later examination consistent with the warrant. The examination may require techniques, including but not lim ited to computer-assisted scans of the entire m edium , that m ight expose many parts of a hard drive to human inspection in order to detennine whether it is evidence described by the warrant. 12 / ,?'% t p,I 4 Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 13 of 15 Pageid#: 13 REQUEST FOR SEALING Because this is a continuing investigation, your Affant requests that the search warrant, search warrant application, sealing application and order, and this affidavit be sealed until such time as the Court directs otherwise. Public disclosure of these documents at this time would seriously jeopardize the ongoing investigation, provide an opportunity to destroy evidence, change patterns of behavior, notify confederates, or allow confederates to flee or continue tlight from prosecution. Furthermore, this investigation may result in applications for additional search warrants to be executed at other locations in the near future. CONCLUSION Based on the information outlined above, your affiant believes that Firebird, Cherokee Tobacco LLC, and President Kathryn Farley have violated Title l 8 U.S.C. j 2342 (b), by knowingly making a false statement with respect to the information required by a licensee; Title 18 U.S.C. j 1957 for knowingly engaging in a m onetary transaction in criminally derived property of a value greater than $ 10,000 and is derived from a specified unlawful activity; Title 26 U.S.C. j 5762($43) by refusing or failing to pay taxes imposed by Title 26 U.S.C. j 5703 and 5701. Your affiant believes that there is probable cause to believe that there is evidence of these violations of Federal law, specifkally identified in Attachment A, present at the business location of Firebird M anufacturing LLC, and Cherokee Tobacco LLC, 1057 Bill Tuck Highway, Suites 239 and 217, South Boston, VA 24592, and 1057 Bill Tuck Highway, Building B, South Boston, VA 24592. Your affiant believes that this evidence is stored in handwritten, typewritten and electronic format. Your affiant respectfully requests that a warrant be issued to authorize the search of the premises described in Attachment A, at 1057 Bill Tuck Highway, Building B, Suite 239 and Suite 217, South Boston, Virginia 24592, and to seize the items described in Attachment B. OBER . M ARTENS, SPECIAL AGENT 1RS CRIM INAL INVESTIGATION 13 l.b yl 1 1 Jt 4 Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 14 of 15 Pageid#: 14 z/- swon AND suBscmBEo BEFORE ME ox THIs IL DAY OF AUGUST, 2013. ROBERT S. BALLOU UNITED STATES M AGISTRATE JUDGE W ESTERN DISTRICT OF VIRGINIA ATTACHM ENTS ATTACHM ENT A - DESCY PTION OF LOCATION S TO BE SEARCHED ATTACHM ENT B - ITEM S TO BE SEIZED Case 7:13-mj-00101-RSB Document 1 Filed 08/21/13 Page 15 of 15 Pageid#: 15 IN THEUNITEDSTATESDISTRICT COURT FORTHEWESTERNDISTRICTOFVIRGINIA INTHEMATTEROFTHESEARCHOF: ) ) ThePremisesat ) 1057BillTuckHighway,BuildingB, Suites239and217 ) SouthBoston, Virginia24592 ) ATTACHMENTA DESCRIPTIONOFLOCATIONSTOBE SEARCHED- WDVA Youraffiantsubmitsthatthere is probablecauseto believethatarticlesconstitutingcontraband, evidence,fruits, and instrumentalitiesoftheaforementionedcriminalviolationswill befound on thepersonsoforat thetarget locationslisted below: 1. 1057BillTuckHwy, BuildingB, South Boston, Virginia24592. Thepremises, is identifiedasthe currentwarehouseand manufacturingfacility forFirebird ManufacturingLLC,and CherokeeTobaccoCompanyLLCand is describedasan industrial warehouseand manufacturingfacility. Thebuildingis located behind 1057,BuildingA, which is an unrelated business. CherokeeTobaccoand Firebird Manufacturingsignsarevisibleonthefrontofthe building.Thebuilding is tan and metal. Thefrontand sideofthe buildingappearto havewarehousedoors. Case 7:13-mj-00101-RSB Document 1-1 Filed 08/21/13 Page 1 of 5 Pageid#: 16 --- 2. 1057Bill TuckHwy, Suite239,South Boston,VA24592, is located in a multi-office officebuildingthathouses theofficesfor Firebird ManufacturingLLC and Cherokee Tobacco LLC. Sourceshaveprovided thatthe mainCherokeeTobaccoLLCand Firebird ManufacturingLLCofficesarehoused insuite239. Thebuildingis tan concrete buildingwithfrontand rearentrances. Thefrontentrancehasexterior concretestairsand largetwo level glasswindowssurroundingtheglassentrydoors. Thereare no similarbuildings in thearea. Case 7:13-mj-00101-RSB Document 1-1 Filed 08/21/13 Page 2 of 5 Pageid#: 17 3. 1057 Bill TuckHwy,Suite217,South Boston,VA 24592, is located in a multi-office officebuildingthat housestheofficesfor FirebirdManufacturingLLC and Cherokee TobaccoLLC. Sourceshaveindicatedthatat leastone FirebirdManufacturingLLC employeeworksatthis location. Thebuildingis tanconcretebuildingwithfrontand rearentrances. Thefrontentrance hasexteriorconcretestairsand largetwo level glasswindowssurroundingtheglassentrydoors. Thereare no similarbuildingsin thearea. Case 7:13-mj-00101-RSB Document 1-1 Filed 08/21/13 Page 3 of 5 Pageid#: 18 2. 1057Bill TuckHwy, Suite239, South Boston,VA24592, is located in a multi-office officebuildingthathousestheofficesfor FirebirdManufacturingLLCand Cherokee TobaccoLLC. SourceshaveprovidedthatthemainCherokeeTobaccoLLCand Firebird ManufacturingLLCofficesare housed in suite239. Thebuilding is tan concretebuildingwith frontand rearentrances. Thefrontentrancehas exterior concretestairsand largetwo level glass windowssurroundingtheglassentrydoors. Therearenosimilarbuildings in thearea. Case 7:13-mj-00101-RSB Document 1-1 Filed 08/21/13 Page 4 of 5 Pageid#: 19 3. 1057Bill TuckHwy, Suite217,SouthBoston, VA24592, is locatedin a multi-office officebuildingthathousestheofficesfor Firebird ManufacturingLLCandCherokee TobaccoLLC. SourceshaveindicatedthatatleastoneFirebirdManufacturingLLC employeeworksatthis location. The buildingis tanconcretebuildingwithfrontand rearentrances. Thefrontentrancehasexteriorconcretestairsand largetwo level glasswindowssurroundingtheglassentrydoors. Thereareno similarbuildingsin thearea. Case 7:13-mj-00101-RSB Document 1-1 Filed 08/21/13 Page 5 of 5 Pageid#: 20 INTHEUNITEDSTATESDISTRICTCOURT FORTHEWESTERNDISTRICTOFVIRGINIA INTHEMATTEROF THESEARCHOF: ) ) ThePremisesat ) 1057BillTuckHighway, BuildingB, Suites239and217 ) SouthBoston, Virginia24592 ) ATTACHMENT B DESCRIPTIONOFITEMSTOBESEIZED- WESTERN DISTRICTOFVIRGINIA I) Blackberry, J-Phone, Droid orsimilarstyled device/cellulartelephone,PDA,I-Pad or similardevicecapableofperformingsimilarfunctions regardlessofthemakeor brand nameofthedevice, belongingtoorunderthedominionorcontrol of Kathryn Farley,Firebird ManufacturingLLC,orCherokeeTobaccoLLC,oranyperson involved in thesaleofdistributionofproductfrom Firebird ManufacturingLLCor CherokeeTobaccoLLC. 2) Businessand/orpersonal recordsofcigaretteortobacco producttransactionsand financial recordsandotherrecordsordocumentsreflectingdiversionactivityorthe disposition ofproceedsofanyspecified unlawful activity including, but not limited to, thefollowing: a) retained copiesoffederal, state,and local excise,corporate,partnership, business,and personal incometax returns; FormsW-2; Forms 1099; tax records; anysupportingdocumentationand attachments; and any correspondenceto/from taxingagencies; b) notesoffinancial transactionsand/or cigaretteortobaccoproducts transactions; c) correspondence, including electronic mail transmissions. letters. {axes. and notes. relatingto financial transactionsand/or cigaretteoftobaccoproducts transactions, includingthe identificationofcustomers,suppliers, associates, partnersandco-conspirators; Case 7:13-mj-00101-RSB Document 1-2 Filed 08/21/13 Page 1 of 4 Pageid#: 21 d) bank records, includingdepositslips,cancelledchecks,withdrawal slips,and accountstatements, investmentrecords, including brokeragestatements,and creditand debitcard records; e) currency, bankchecks,cashier'schecks, negotiablefinancial instruments, wiretransferdocumentation, moneyorders, stocks, bonds, preciousmetals, and real estate records; and/orwork sheets, tallysheetsorledgersheets reflectingoraccountingfor money received, disbursed orexchanged. f) financial statements, incomestatements, balancesheets,cashreceipts,cash disbursements, payroll, inventory, manufacturingrecords andjournalsand records; and any supportingwork papers, schedules, attachmentsor documents; g) bills and invoices, including sales. purchases and expenses; h) recordsoffinancial paymentspaid and received; i) mortgageor loan recordspayableorreceivableand insurance records; j) Deeds, titlesorotherproofofownershipofproperty; k) recordsand keys ofstoragefacilitiesowned or rented; I) recordsofbusinessfilings or licensesand minutesofmeetings; m) recordsofpersonal and businessexpenses; n) safe depositrecords and keys; 0) postoffice box and private mail box records; p) equipmentrental records and otherleaseand rental agreements; q) transportation records, including butnot limited to, accounts, bills, receipts and invoices, billsoflading, airway bills, freight bills, aircargo bills, dispatch records, logs, manifests,shippingdocuments, and invoices; r) creditapplications,creditcard statementsand receipts; s) papertickets, notes, schedules, receipts, and otheritems relatingto travel; t) cellularphones belongingto orunderthedominionorcontrol ofKathryn Farley, Firebird ManufacturingLLC,orCherokeeTobaccoLLC, orany person involved in the saleofdistribution ofproductfrom Firebird Case 7:13-mj-00101-RSB Document 1-2 Filed 08/21/13 Page 2 of 4 Pageid#: 22 Manufacturing LLC or Cherokee Tobacco LLC, and cellular and landline telephone statements and records relating thereto; u) any packages and related shipping materials related to importations or interstate shipments of cigarettes, including, but not limited to Federal Express Mail receipts along with all Western Union receipts for sending or receiving money. 3) Safes and their contents, iffound, or indications that a safe was previously installed or located in the business 4) Records that identify customers, suppliers, associates partners, and/or co-conspirators, including, but not limited to: contracts, address books, telephone books, rolodexes, telephones, pagers, or personal digital assistants with stored telephone information, notes reflecting telephone and pager numbers, photographs (to include still photos, negatives, movies, slides, video tapes), and recordings of conversations, including those made over telephone answering machines. 5) Identification documents, to include driver's license, passports, visas or similar documents and representative exemplars or original handwriting samples. 6) Papers, tickets, notes, receipts, and other documents or items relating to domestic and international travel. 7) Indicia of occupancy, residency, and/or ownership of the premises, property and/or vehicles, including keys, photographs, or documents. 8) Documents showing custody and control of the residence or room where evidence is seized, including, but not limited to, utility and other bills, driver's licenses, passports, visas and other handwritten notes or other correspondence addressed to or from the occupants of the residence or room. 9) For purposes of this attachment, the following definitions and inclusions apply: a) Records and Information The terms "records" and "information" include all of the foregoing items of evidence in whatever form and by whatever means they may have been created or stored, including any electrical, electronic, or magnetic form (such as any information on an electronic or magnetic storage device, including floppy diskettes, hard disks, ZIP disks, CD-ROMs, optical discs, backup tapes, printer buffers, smart cards, memory calculators, pagers, personal digital assistants such as Palm Pilot computers, as well as printouts or readouts from any magnetic storage device); any handmade form (such as writing, drawing, painting); any mechanical form (such as printing or typing); and any photographic form (such as Case 7:13-mj-00101-RSB Document 1-2 Filed 08/21/13 Page 3 of 4 Pageid#: 23 microfilm, microfiche, prints, slides, negatives, videotapes, motion pictures, photocopies). b) Computer Hardware Computer hardware consists of all equipment which can collect, analyze, create, display, convert, store, conceal, or transmit electronic, magnetic, optical, or similar computer impulses or data. This includes any data-processing devices (such as central processing units, memory typewriters, and self-contained "laptop" or "notebook" computers); internal and peripheral storage devices (such as fixed disks, external hard disks, floppy disk drives and diskettes, tape drives and tapes, optical storage devices, transistor-like binary devices, and other memory storage devices); peripheral input/output devices (such as keyboards, printers, scanners, plotters, video display monitors, and optical readers); related communications devices (such as modems, cables and connections, recording equipment, RAM or ROM units, acoustic couplers, automatic dialers, speed dialers, programmable telephone dialing or signaling devices, and electronic tone- generating devices); as well as any devices, mechanisms, or parts that can be used to restrict access to computer hardware (such as physical keys and locks). c) Computer Software Computer software is digital information which can be interpreted by a computer and any of its related components to direct the way it works. Software is stored in electronic, magnetic, optical, or other digital form. It commonly includes programs to run operating systems, applications (like word-processing, graphics, or spreadsheet programs, utilities, compilers, interpreters, and communications programs). d) Computer-related Documentation Any documentation, operating logs and reference manuals regarding the operation of the computer equipment, storage devices or software. Any passwords, password files, test keys, encryption codes or other information necessary to access the computer equipment, storage devices or data. Case 7:13-mj-00101-RSB Document 1-2 Filed 08/21/13 Page 4 of 4 Pageid#: 24
Robert Clark and Billie Clark v. State Farm Fire & Casualty Insurance Company, Regional Credit Association, and Paul Watts, 54 F.3d 669, 10th Cir. (1995)