Half of the 47 employees of AMA Laboratories Inc. have left or have been laid off in the past eight months following federal raids on the New City company, and customers are taking their business to other testing labs and banks have refused to extend credit.
Those raids, in April and June, were conducted in “bad faith,” the company states in letters to federal court judges in White Plains. AMA Laboratories has asked the court to unseal the search warrants and stop the government from introducing seized evidence to a federal grand jury.
“While no indictment has been returned, the raids have understandably taken a fearful toll on the business,” the company’s attorney, Richard S. Harrow of Albany, wrote to the court. “The awareness of the raid in the commercial community continues to wreak havoc.”
Government attorneys responded that the company has no legal grounds for its demands and it needs to keep the materials secret to protect the integrity of an ongoing investigation.
“If and when an indictment is handed down, AMA will have ample opportunity to file motions to dismiss the indictment and/or to suppress evidence,” Assistant U.S. Attorney Olga Zverovich wrote in a Nov. 22 letter to the court.
The legal dispute became public on Dec. 7 when a batch of letters from AMA Laboratories and the U.S. Attorney’s Office were disclosed by the court.
AMA Laboratories was founded in 1982 by Gabriel J. Letizia, the CEO and sole shareholder. The lab tests cosmetics and drug products for safety and efficacy, and it produces reports and marketing materials to support customers’ claims.
On April 6 and June 20, FBI agents and detectives from the Rockland County District Attorney’s Office, authorized by seven search warrants, seized voluminous records.
The company has asked the court to unseal the search warrant affidavits and supporting materials, arguing that agents had acted in bad faith.
Agents, for example, allegedly turned off 99 security cameras that monitor the six-building campus at 216 Congers Road, preventing the company, AMA claims, from recording an objective account of the government’s conduct.
AMA also claims that the government prevented the company’s lawyer from discussing the warrants or giving legal advice to employees, and that agents unlawfully interviewed witnesses who they knew were represented by attorneys.
One building that was searched was not covered by a warrant but Letizia’s daughter, Angelique, consented to the search.
AMA’s attorney suggested an intriguing possibility.
“If Ms. Letizia was either a whistleblower or informant,” Harrow states in a footnote in a letter to the court, “she may not have had the authority to consent to such a search.”
AMA says it has an “acute and dramatic” need for the search warrant documents, so that it can understand the basis of the government’s investigation and focus on an internal investigation before a criminal indictment is issued.
On Nov. 10, the company asked that evidence obtained “in violation of AMA’s constitutional rights” not be allowed to be presented to a grand jury.
The company said agents persuaded employees to provide incriminating information by asserting that AMA would soon be put out of business for criminal activity and that Gabriel Letizia was going to jail.
Agents who served a federal grand jury subpoena at the home of AMA’s clinical studies director Donna Muratschew allegedly said, “the window of opportunity is closing.”
After the employee’s attorney, Phyllis Simon of New City, invoked her Fifth Amendment right not to testify, the attorney received a letter stating that the employee was now considered a “target of the investigation.”
Federal attorneys responded that AMA has no constitutional rights of access or legitimate need for sealed search warrant materials in the middle of an investigation. The government claims a “compelling interest in preserving the confidentiality and integrity of its ongoing investigation.”
AMA is free to interview witnesses, the government said, gather evidence and investigate fraud within the company.
The government submitted a separate, confidential letter to the court, according to a footnote in its publicly disclosed letter, to address “the government’s compelling need to keep the search warrant materials under seal.”
AMA Laboratories asked the court to disclose the confidential letter.
“This case has already been in the media and public forum for months,” the company attorney said, “and there is no risk to any potential witness.”
On Dec. 8, Magistrate Judge Paul E. Davison denied AMA’s request for disclosure of the confidential letter.