Colorado’s second-highest court clarified on Thursday that judges are empowered to compel out-of-state companies to produce electronic records under state law.

El Paso County jurors convicted Mischa Jargowsky on three counts of money laundering and one violation of Colorado’s organized crime law. She owned pawnshops in Pueblo and Colorado Springs, and prosecutors introduced evidence that Jargowsky’s business accepted items for resale that were still in their boxes and had been stolen from retailers. The defense argued that Jargowsky took reasonable steps to verify the items were not stolen and that she was not involved in any transactions involving stolen merchandise.

As part of the investigation, a detective obtained warrants for banks and businesses located outside of Colorado, seeking information about Jargowsky. He also sought records from businesses that were in Colorado, but outside El Paso County. The applications to the court referenced the federal Stored Communications Act.

The defense sought to bar evidence obtained through the warrants, arguing the federal law did not apply and no Colorado law gave state judges the authority to authorize out-of-state searches for electronic business records.

The prosecution acknowledged that the federal law did not apply, but then-District Court Judge David A. Gilbert concluded the warrants were valid under the Colorado law authorizing the production of electronic business records “in Colorado or elsewhere.”

“There is no merit in the argument that the warrants requesting records are invalid because they do not state the correct statute that justifies such warrants under Colorado Law. No cases have been cited that suggest that failure to include in the warrant affidavit or the warrant itself the correct legal authority that would support the warrant invalidates the warrant,” he wrote.

On appeal, Jargowsky maintained that judges cannot order the production of evidence outside of their judicial district or the state.

“Most fundamentally, the Colorado General Assembly has no authority to unilaterally enact a statute governing conduct occurring in a different state. Colorado’s authority as a sovereign extends to its borders and no further,” wrote attorney Jeffrey S. Pagliuca.

A three-judge Court of Appeals panel disagreed.

“Colorado has the authority to regulate entities that conduct business within its borders,” wrote Judge David H. Yun in a Sept. 3 opinion. “By choosing to do business in Colorado, these entities are subject to Colorado state law, including the requirement to produce records.”

The panel also agreed with Gilbert that the detective’s erroneous reference to federal law did not invalidate the warrants.

The case is People v. Jargowsky.