SANTA ANA — Handing prosecutors a crippling setback, a federal judge ruled Friday they could not use crucial evidence against an Irvine woman who allegedly brought as many as 30 pregnant women here from Hungary to help sell their babies to California couples.
U.S. District Judge Alicemarie H. Stotler said federal agents did not have reasonable grounds to suspect the defendant of wrongdoing when they executed a search warrant at her home last June and hauled away six boxes of documents.
When the search warrant was issued last June, federal agents said they were investigating 48-year-old Marianne Gati on suspicion of money laundering, tax and mail fraud, and harboring illegal immigrants in the country.
But a federal grand jury indictment later accused Gati and her engineer husband, Thomas, of four counts of filing false tax returns, alleging that they had failed to report income earned from the wife's adoption-related business. The other alleged crimes were not charged.
Gati's international adoption ring has sparked investigations on two continents. Hungarian police say they are investigating whether Hungarian nationals, including one of the country's top doctors, put Gati in contact with poor pregnant women who eventually came to Orange County to sell their babies for cash.
Gati and her husband have denied the charges, saying the woman ran a legal adoption business.
Their tax-evasion trial was set for Oct. 29, but the judge's ruling has virtually gutted the government's case, preventing it from using 15,000 pages of documents seized from the couple's home.
Prosecutors have three choices: pursue the charges without the seized documents; drop the case altogether; or appeal Stotler's ruling to the U.S. 9th Circuit Court of Appeals.
H. Dean Steward, an attorney for the wife, said he was pleased with the judge's decision.
"It's clearly a victory for us, and we're ready to take this case to trial," Steward said.
Marianne Gati, also known as Maria Rozsa, a Canadian citizen who was born in Hungary, was alleged in the first federal complaint to have operated a baby-selling ring that provided airline tickets and other travel documents for poor Hungarian women to come to Orange County.
According to the complaint, Gati promised to pay each mother "$1,000 for a baby with dark features and $12,000 for a baby with light features."
One source mentioned in the complaint--a woman later identified as a feuding tenant in Gati's second Irvine house--told federal agents that Gati made $20,000 for each adopted baby.
The federal criminal complaint stated that no husbands nor fathers ever accompanied the women to the United States.
"Any documents provided to adoption agencies on behalf of the fathers are signed in Hungary and notarized later in the United States," the complaint stated. "In some instances, the fathers' signatures are forged" in an apparent attempt to circumvent the birth fathers' rights.
IRS agents said they arrested Gati after she tried to transfer $51,000 from a bank account with a $400,000 balance.
The agents said they moved to secure a search warrant for Gati's house after the Hungarian National Police asked officials at the American Embassy in Vienna for help in their investigation of Gati's adoption ring.
The Hungarian police provided federal agents with the names of two pregnant women who came to Orange County in 1995 and were paid $1,000 each for their babies.
After executing a search warrant at Gati's residence at the Westpark section of Irvine, officials also confiscated the $400,000 from her Wells Fargo bank account.
Even though the couple had such large cash reserves, their tax returns showed no more than approximately $60,000 in income for each of the last three tax years, the IRS charged.
But attorney Steward, representing the wife, filed a motion to suppress the seized documents, stating that the part-time magistrate judge who issued the search warrant had no sound information indicating wrongdoing.
In court papers, Steward said Marianne Gati was merely an adoption facilitator who "would locate birth parents in Europe, arrange transportation, and lodging fees, medicals, backgrounds checks, passport and visa applications."
Each adoption was processed by a panel of Orange County attorneys who "scrupulously followed" California adoption laws, Steward said.
Steward, who heads the federal public defender's office here, said federal agents began investigating his client based only on scant information from Hungarian police that she was "selling babies." They also received unsubstantiated statements from an aggrieved tenant that Hungarian women who came to Irvine were trying to hide their pregnancy from others.
Steward said the information agents acted upon did not amount to probable cause--or reasonable grounds to suspect a crime.
Stotler agreed and said that although the information agents received was a good starting point, authorities should have done more to corroborate the clues.
Stotler added that she was not convinced that agents had enough evidence of "a scheme to defraud."
Assistant U.S. Atty. J. Daniel McCurrie, however, said he believed agents had sufficient information to seek search warrants. The agents were acting on a request by the Hungarian National Police and their own information that Gati was moving money out of her bank accounts.
Stotler responded that Hungarian police information may have been "in the national interest of Hungary," but the agency's tip and other information agents collected still did not amount to probable cause.
The judge said prosecutors had until Oct. 4--or two weeks--to decide if they would press the charges against the Gatis.
As she left the courtroom, Marianne Gati said she was overjoyed with the judge's ruling.
"I'm 100% innocent," she said.