Court Rejects Hedge Funder Case Against U.S. Attorney

David Ganek, who ran a $4 billion hedge fund, would have you believe this is a day that will live in infamy.

With his lawsuit thrown out by a federal appeals court, Ganek appealed to the court of public opinion. He said government agents -- including former U.S. Attorney Preet Bahara -- lied to get a search warrant of his offices.

"This is a dangerous day for private citizens and a great day for ambitious, attention-seeking prosecutors who are now being rewarded with total immunity even when they lie and leak," Ganek said in a statement.

He was half right, anyway.

False Statements

Ganek sued several FBI agents and U.S. attorneys for wrongfully searching his offices, which allegedly led to shuttering his fund. He said they lied to get a warrant, and a trial judge agreed.

In Ganek v. Leibowitz, the U.S. Second Circuit Court of Appeals also acknowledged that the FBI made false statements about Ganek in securing the warrant. However, the appeals court said it wouldn't have made a difference because the authorities still had probable cause to search.

"Probable cause to search a location, such as Ganek's office, for evidence of a crime does not require probable cause to think that the person those premises is to be searched is himself a knowing participant in the criminal activity under investigation." Judge Reena Raggi wrote. "It requires only probable cause to think that evidence of a crime -- by whomever committed -- will be found in the place to be searched."

Qualified Immunity

To reach their conclusion, the judges rewrote the false affidavit supporting the warrant. Under the "corrected affidavit" doctrine, they said there was enough evidence for probable cause to search.

"We reach this conclusion, moreover, as a matter of law because there can be no genuine dispute as to a reasonable judicial officer issuing the challenged search warrant upon review of the corrected affidavit," the Second Circuit said.

Reversing the trial court, the panel said the government agents had a qualified immunity from liability even if the actual affidavit contained false information about Ganek.

He was not charged with a crime in the underlying investigation.

Related Resources:

• United States Second Circuit Cases (FindLaw's Cases & Codes)
• 2nd Cir. Decides Sailing Injury Res Ipsa Loquitur (FindLaw's U.S. Second Circuit Blog)
• 'Fake Rape' Suit Revived Against Rolling Stone (FindLaw's U.S. Second Circuit Blog)