FBI Was Slow to Check Pellicano's Audio Lab

Agents waited almost two months to seize the taping equipment, court documents show.

By Greg Krikorian And Andrew Blankstein
Times Staff Writers

June 28, 2006

Court documents released Tuesday show that FBI agents did not examine private investigator Anthony Pellicano's sophisticated audio lab during their initial November 2002 search of his Sunset Strip offices, raising new questions about the handling of the probe.

After the November search, the court documents show, FBI agents waited almost two months to seize computers and other items from the lab.

With prosecutors publicly acknowledging that they have only one allegedly wiretapped conversation on tape, the time lapse between searches raises the possibility that Pellicano or others could have removed audio files or potential evidence in the case from computers in the lab.

In recent court proceedings, federal prosecutors said they had seized 1,300 audio recordings from Pellicano's offices, nearly 300 of which remain encrypted.

The newly released documents also show that Anita Busch, a former Los Angeles Times reporter who was allegedly threatened at Pellicano's behest in June 2002, also told authorities that someone had hacked into her personal computer and tapped her telephone.

So far, Pellicano and 13 others have been charged in the federal probe of wiretapping, racketeering, witness tampering and other crimes. Seven of Pellicano's co-defendants already have pleaded guilty to charges ranging from lying to the FBI to hiring Pellicano to engage in illegal wiretapping.

He and his remaining co-defendants have pleaded not guilty to charges that they used wiretaps and illegal background checks to obtain "confidential, embarrassing or incriminating" information, typically to help attorneys and other clients gain an advantage in civil or criminal litigation.

They are scheduled to go on trial in October.

The court papers released Tuesday relate to three of six searches conducted by authorities in their investigation of Pellicano, which began after he was allegedly linked to the threat against Busch.

Investigating the threat, the FBI first raided Pellicano's offices in November 2002 and hauled away computers, data storage devices and other items, according to the search warrant documents, including affidavits, signed by the lead agent in the case, Stanley Ornellas.

In a January 2003 affidavit, Ornellas said he had spoken to an agent who had participated in the earlier search and was told that nothing was taken from the audio lab at Pellicano's offices.

"Moreover," Ornellas wrote, "a number of computers located within the audio lab were not searched or seized, as the searching agents in their discretion determined that the items to be seized pursuant to the initial warrant … were unlikely to be found in that portion of the premises."

The FBI and U.S. attorney's office declined to comment Tuesday about the handling of the searches.

Former federal prosecutor Orin Kerr said it was not clear if the searches should have been handled differently. "The bottom line is it's hard to tell whether this was a missed opportunity or poor judgment," said the cybercrimes specialist and George Washington University law professor.

"The problem with computers is that you don't know what is in them until you look at them. So when [authorities] enter a business with dozens of computers, they need to decide: do they take every one or be more selective … it's a classic problem with digital evidence."

The threat that triggered the Pellicano probe was made to look like a mafia warning. Busch, then a Times reporter who has since left the paper, found a note that said "Stop" and a dead fish with a rose in its mouth on the windshield of her car.

A few days later, she reported that someone had hacked into her computer and stolen e-mails from two online accounts, according to the newly released documents.

Over the next two months, she also found her computer hard drive had been infected with a virus that intercepted passwords and document files and sent information through e-mail to an unknown location. She deleted the virus, and her hard drive crashed.

After detecting problems with her telephone answering machine, she contacted a technician at Pacific Bell in November 2002.

The technician told Busch that he had "never seen a problem like hers." Busch contacted Pacific Bell a second time and was told by an employee that a "half tap" — or wiretap — had been placed on her second home phone line.

The court papers also included additional details about the involvement of Alexander Proctor, an ex-convict who was arrested for allegedly placing the note and dead fish on Busch's windshield.

According to the search warrant affidavits, Proctor told a government informant in August that he owed Pellicano $14,000 and claimed that actor Steven Seagal had hired Pellicano to threaten a reporter who was preparing an article on the actor.

Authorities have since said they found no convincing evidence that the actor was involved.

Proctor said Pellicano had agreed to pay him $10,000 "for the job involving the reporter," but was so pleased with Proctor's work that Pellicano wiped out the debt and told him they were even, the affidavit said.

Proctor told the informant a week later that he was waiting to hear from the private eye about "other jobs," but that Pellicano was waiting for up-front payments from those clients. For one of the jobs, Pellicano allegedly said he would pay Proctor $100,000 to get a wanted Israeli murder suspect out of the U.S.