Bruno Government Motion To Uphold
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Bruno Government Motion To Uphold as PDF for free.
More details
- Words: 20,585
- Pages: 76
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA
Criminal Action No.
09-CR-29
v. JOSEPH L. BRUNO,
Speedy Trial Act Exclusion Pursuant to 18 U.S.C. § 3161(h)(1)(F) & (J) Through 30 Days After Conclusion of Hearing on Pretrial Motions (Hon. Gary L. Sharpe)
Defendant.
Government’s Omnibus Memorandum of Law in Opposition to Defendant’s Three Motions to Dismiss The Indictment, Two Motions to Strike Portions of the Indictment, and A Motion For a Bill of Particulars.
Table of Contents Introduction and Summary. . . . . . . . . . . . . . . . . . . . 1 I.
II.
Honest Services Mail and Wire Fraud Encompasses Failure To Disclose A Material Conflict of Interest Or Other Material Information.. . . . . . . . . . . . . . . . . . . 2 A.
Pre-McNally Case Law Prohibited, Under The Mail Fraud Statute, Failure To Disclose Material Conflicts of Interest Or Other Material Information.. . . . . . 4
B.
McNally v. United States. . . . . . . . . . . . . . . 8
C.
The Enactment of 18 U.S.C. § 1346.. . . . . . . . . . 9
D.
Following McNally, Failure to Disclose a Material Conflict of Interest Or Other Material Information Remains One of the Two “Core Categories” of Honest Services Fraud. . . . .
11
Argument A.
B.
The Honest Services Statute is Not Unconstitutionally Vague as Applied to This Case Because Ordinary People Can Understand That Failure to Disclose Material Conflicts of Interest or Related Material Information is Prohibited... . . .
16
The Allegations of the Indictment are Relevant and Sufficient to Charge Defendant With Honest Services Mail and Wire Fraud... . . . . . . . . . .
24
1.
Acts Which Occurred Before June 30, 2003 are Relevant to the Honest Services Fraud Scheme and May Not Be Stricken Simply Because They Are Outside the Statute of Limitations. . .24
2.
Evidence Regarding Non-Compliance With State Law Is Relevant And Admissible To Defendant's Intent and Motive, and To Assist the Jury In Understanding the Actions of Participants, But Allegations of State Law in an Indictment Do Not Transform Violation of State Law Into An “Element” of Honest Services Fraud.. .
3.
32
Accepting the Allegations in the Indictment As True, as Required When Assessing the Sufficiency of an Indictment, This Indictment Charges a Valid Offense. . . . . . . . . . . . . . . . . .35
C.
The Honest Services Fraud Statute is a Clear Exercise of Congress’s Power and Does Not Violate Any Federalism Principles.. . . . . . . . . .40
D.
The Model Grand Jury Charge is Not Unconstitutional. . . . . . . . . . . . . . . . . . .43
E.
The Forfeiture Allegation Should Not be Stricken. . . . . . . . . . . . . . . . . . . . . .
50
None of the Language in the Indictment is Surplusage. . . . . . . . . . . . . . . . . . . . .
53
F.
1.
2.
3.
G.
Allegations Regarding SEC Rule 206-(4)-3 are Relevant Evidence Regarding Defendant's Intent and Motive and As Background. . . . . .
53
The Phrases “Dishonest Services” and “Sham Invoice” are Accurate Descriptions of Relevant Evidence.. . . . . . . . . . . . .
56
Defendant’s Motion To Strike Surplusage Should Be Denied For the Independent Reason That He Has Failed To Show That the Allegations Are Inflammatory and Prejudicial.. . . . . . . 58
A Bill of Particulars is Not Required Because the Indictment is Detailed and the Discovery Includes “Documents of Particular Relevance”... . .
59
III. Conclusion.. . . . . . . . . . . . . . . . . . . . . . .
63
-ii-
Table of Authorities FEDERAL CASES Article II Gun Shop, Inc. v. Gonzales, 441 F.3d 492 (7th Cir. 2006). . . . . . . . . . . . . . . . .
26
Badders v. United States, 240 U.S. 391 (1916).. . . . . . . . . . . . . . . . . . . . .
40
Ballard v. United States, 329 U.S. 187 (1946).. . . . . . . . . . . . . . . . . . . . .
50
Bank of Nova Scotia v. United States, 487 U.S. 250 (1988).. . . . . . . . . . . . . . . . . . . . .
50
City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991).. . . . . . . . . . . . . . . . . . . . .
39
Hayes Int’l. Corp. v. McLucas, 509 F.2d 247 (5th Cir. 1975). . . . . . . . . . . . . . . . . . 5 Hamling v. United States, 418 U.S. 87, 117 (1974).. . . . . . . . . . . . . . . . . . .
36
Hill v. Colorado, 530 U.S. 703 (2000).. . . . . . . . . . . . . . . . . . . . .
17
Kolender v. Lawson, 461 U.S. 352 (1983))... . . . . . . . . . . . . . . . . . . .
17
McNally v. United States, 483 U.S. 350 (1987).. . . . . . . . . . . . . . . . . 4, 8, 9, 42 Muntaqim v. Coombe, 366 F.3d 102 (2d Cir. 2004).. . . . . . . . . . . . . . . . .
18
SEC v. Capital Gains Research Bureau, 375 U.S. 180 (1963).. . . . . . . . . . . . . . . . . . . . . . 7 Shannon v. United States, 512 U.S. 573 (1994).. . . . . . . .
48
Sir Speedy, Inc. v. L & P Graphics, Inc., 957 F.2d 1033 (2d Cir. 1992). . . . . . . . . . . . . . . . .
26
United States v. Adams, 343 F.3d 1024 (9th Cir. 2003).. . . . . . . . . . . . . . . .
45
-iii-
United States v. Alfonso, 143 F.3d 772 (2d Cir. 1998).. . . . . . . . . . . . . . .
36, 37
United States v. Alter, 482 F.2d 1016 (9th Cir. 1973).. . . . . . . . . . . . . . . .
44
United States v. Altman, 48 F.3d 96 (2d Cir.1995). . . . . . . . . . . . . . . . . . .
21
United States v. Antico, 275 F.3d 245 (3d Cir. 2001).. . . . . . . . . . . . .
11, 14, 23
United States v. Ashdown, 509 F.2d at 798 (5th Cir. 1975).. . . . . . . . . . . . .
26, 27
United States v. Bicoastal Corp., 819 F. Supp. 156 (N.D.N.Y. 1993). . . . . . . . . . . . . . .
37
United States v. Bohonus, 628 F.2d 1167 (9th Cir. 1980).. . . . . . . . . . . . . . . .
19
United States v. Bortnovsky, 820 F.2d 572 (2d Cir. 1987).. . . . . . . . . . . . . . . . .
60
United States v. Brechtel, 997 F.2d 1108 (5th Cir. 1993).. . . . . . . . . . . . . .
33, 34
United States v. Brown, 555 F.2d 336, 339-40 (2d Cir. 1977).. . . . . . . . . . . . .
21
United States v. Bronston, 658 F.2d 920 (2d Cir. 1981).. . . . . . . . . . . . . . . . 6, 15 United States v. Brumley, 116 F.3d 728 (5th Cir. 1997). . . . . . . . . . .
12, 13, 32, 56
United States v. Bryan, 58 F.3d 933 (4th Cir. 1995). . . . . . . . . . . . . . . . . United States v. Bush, 522 F.2d 641 (7th Cir. 1975). . . . . . . . . . . .
32
4, 5, 14, 15
United States v. Castro, 89 F.3d 1443 (11th Cir. 1996).. . . . . . . . . . . . . . . .
41
United States v. Cedano-Arellano, 332 F.3d 568 (9th Cir. 2003). . . . . . . . . . . . . . . . .
45
-iv-
United States v. Cerone, 830 F.2d 938 (8th Cir. 1987). . . . . . . . . . . . . . . . .
36
United States v. Ciambrone, 601 F.2d 616, 629 (2d Cir. 1979). . . . . . . . . . . . . . .
47
United States v. Chalmers, 410 F. Supp. 2d 278 (S.D.N.Y. 2006).. . . . . . . . . . .
60, 62
United States v. Cisneros, 203 F.3d 333 (5th Cir. 2000). . . . . . . . . . . . . . .
26, 27
United States v. Coonan, 938 F.2d 1553 (2d Cir.1991).. . . . . . . . . . . . . . . . .
17
United States v. Curry, 681 F.2d 406 (5th Cir. 1982). . . . . . . . . . . . . . . . .
10
United States v. DeFiore, 720 F.2d 757 (2d Cir. 1983).. . . . . . . . . . . . . . . . .
26
United States v. Derosier, 501 F.3d 888 (8th Cir. 2007). . . . . . . . . . . . . . . . .
23
United States v. Dial, 757 F.2d 163 (7th Cir. 1985). . . . . . . . . . . . . . . . . . 6 United States v. Dula, 989 F.2d 772 (5th Cir. 1993). . . . . . . . . . . . . . . . .
27
United States v. Eisen, 974 F.2d 246 (2d Cir. 1992).. . . . . . . . . . . . . . . . .
31
United States v. Elliott, 363 F. Supp. 2d 439 (N.D.N.Y. 2005).. . . . . . . . . . . . .
38
United States v. Ferguson, 478 F. Supp. 2d 220 (D. Conn. 2007).. . . . . . . . . . .
57, 62
United States v. Geddings, 278 Fed. Appx. 281 (4th Cir. 2008), cert. denied, 129 S. Ct. 435 (2008).. . . . . . . . . . . . . . . . . .
18, 19
United States v. Geddings, 2006 WL 4877548 (E.D.N.C. 2006), aff'd Geddings, 278 Fed. Appx. 281 (4th Cir. 2008), cert. denied, 129 S. Ct. 435 (2008).. . . . . . . . . . .
18, 19
-v-
United States v. Giampa, 904 F. Supp. 235 (D.N.J. 1995). . . . . . . . . . . . . . . .
28
United States v. Grammatikos, 633 F.2d 1013 (2d Cir. 1980). . . . . . . . . . . . . . . . .
51
United States v. Grandmaison, 77 F.3d 555 (1st Cir. 1996).. . . . . . . . . . . . . . . . .
12
United States v. Grasso, 173 F. Supp. 2d 353 (E.D. Pa. 2001).. . . . . . . . . . . . .
58
United States v. Gross, 2007 WL 1556638 (E.D. Mich. 2007).. . . . . . . . . . . . . .
59
United States v. Hasner, 340 F.3d 1261 (11th Cir. 2003). . . . . . . . . . . . . . . .
32
United States v. Hatcher, 323 F.3d 666 (8th Cir. 2003). . . . . . . . . . . . . . .
52, 53
United States v. Heacock, 31 F.3d 249 (5th Cir. 1994).. . . . . . . . . . . . . . . . .
31
United States v. Heatley, 994 F. Supp. 483 (S.D.N.Y. 1998). . . . . . . . . . . . . . .
58
United States v. Holzer, 816 F.2d 304 (7th Cir. 1987),vacated and remanded for reconsideration in light of McNally v. United States, 484 U.S. 807 (1987).. . . . . . . . . . . . . . . 4, 6, 7, 13, 15 United States v. Hooks, 2005 WL 3370549 (W.D. Tenn. 2005).. . . . . . . . . . . . . .
46
United States v. Ingredient Tech. Corp., 698 F.2d 88, 96 (2d Cir. 1983). . . . . . . . . . . . . . . .
21
United States v. Jennings, 487 F.3d 564 (8th Cir. 2007). . . . . . . . . . .
32, 33, 39, 52
United States v. Josephberg, 418 F. Supp. 2d 297 (S.D.N.Y. 2005).. . . . . . . . . . . . . United States v. Keane, 522 F.2d 534 (7th Cir. 1975). . . . . . . . . . . . . . .
-vi-
21
14, 33
United States v. Kemp, 500 F.3d 257 (3d Cir. 2007), cert. denied, 128 S. Ct. 329 (2008).. . . . . . . . . . 3, 14, 16 United States v. Kenny, 462 F.2d 1205 (3d Cir. 1972). . . . . . . . . . . . . . . United States v Kincaid-Chauncey, 556 F.3d 923 (9th Cir. 2009). . . . . . . .
58, 59
2, 3, 15, 19, 23, 39
United States v. Klein, 476 F.3d 111, 113 (2d Cir.), cert. denied, 128 S. Ct. 804 (2007).. . . . . . . . . . . . . United States v. Knight, 490 F.3d 1268 (11th Cir. 2007), cert. denied, 128 S. Ct. 547 (2007).. . . . . . . . . . .
36
45, 46
United States v. Lazore, 90 F. Supp. 2d 202 (N.D.N.Y. 2000). . . . . . . . . . . . . .
36
United States v. Mandel, 591 F.2d 1347 (4th Cir. 1979) aff’d in relevant part, 602 F.2d 653 (1979) (en banc).. . . 5, 10 United States v. Marcucci, 299 F.3d 1156 (9th Cir. 2002).. . . . . . . . . . . . . .
45, 48
United States v. Margiotta, 688 F.2d 108(2d Cir. 1981) .. . . 4,5, 10, 13, 14, 21, 22, 32, 41 United States v. Martin, 195 F.3d 961 (7th Cir. 1999). . . . . . . . . . . . . . . . .
32
United States v. McDonough, 56 F.3d 381 (2d Cir. 1995). . . . . . . . . . . . . . . 3, 13, 15 United States v. McElroy, 910 F.2d 1016 (2d Cir. 1990). . . . . . . . . . . . . . . . .
33
United States v. McIntosh, 23 F.3d 1454 (8th Cir. 1994). . . . . . . . . . . . . . . . .
28
United States v. Middlemiss, 217 F.3d 112 (2d Cir. 2000).. . . . . . . . . . . . . . .
14, 23
United States v. Moody, 923 F.2d 341 (5th Cir. 1991). . . . . . . . . . . . . . . . . -vii-
37
United States v. Mulder, 273 F.3d 91 (2d Cir. 2001). . . . . . . . . . . . . . . . . .
25
United States v. Musacchio, 968 F.2d 782 (9th Cir. 1991). . . . . . . . . . . . . . . . .
37
United States v. Muskovsky, 863 F.2d 1319 (7th Cir. 1988).. . . . . . . . . . . . . . . .
37
United States v. Nadi, 996 F.2d 548 (2d Cir. 1993).. . . . . . . . . . . . . . . . .
17
United States v. Nappy, 1995 WL 702363 (S.D.N.Y. 1995). . . . . . . . . . . . . . . .
54
United States v. Narvarro-Vargas, 408 F.3d 1184 (9th Cir. 2005).. . . . . . . . . . . .
45, 48, 49
United States v. Nat’l Dairy Products Corp., 372 U.S. 29 (1963). . . . . . . . . . . . . . . . . . . . . .
17
United States v. Orenuga, 430 F.3d 1158 (D.C.Cir. 2005).. . . . . . . . . . . . . . . .
39
United States v. Ozbay, 2007 WL 656049 (N.D.N.Y. 2007). . . . . . . . . . . . . . . .
55
United States v. Panarella, 277 F.3d 678 (3d Cir. 2002).. . . . . . 8, 13, 15, 16, 23, 32, 39 United States v. Paradies, 98 F.3d 1266 (11th Cir. 1996).. . . . . . . . . . . . . . . .
12
United States v. Parker, 364 F.3d 934 (8th Cir. 2004). . . . . . . . . . . . . . . . .
54
United States v. Parks, 68 F.3d 860 (5th Cir. 1995).. . . . . . . . . . . . . . . . .
54
United States v. Parrett, 530 F.3d 422 (6th Cir. 2008). . . . . . . . . . . . . . . . .
53
United States v. Peters, 2009 WL 763384 (W.D.N.Y. 2009). . . . . . . . . . . . . . . .
51
United States v. Pharis, 298 F.3d 228 (3d Cir. 2002).. . . . . . . . . . . . . . . . .
30
-viii-
United States v. Proffitt, 2008 WL 2225734 (W.D. Mo. 2008).. . . . . . . . . . . . . . .
56
United States v. Porcelli, 865 F.2d 1352 (2d Cir. 1989). . . . . . . . . . . . . . . . .
35
United States v. Read, 658 F.2d 1225 (7th Cir. 1981).. . . . . . . . . . . . . . . .
27
United States v. Rezko, 2007 WL 2904014 (N.D. Ill. 2007). . . . . . . . . . . . . . .
38
United States v. Rigas, 281 F. Supp. 2d 660 (S.D.N.Y. 2003).. . . . . . . . . . . . .
51
United States v. Rosenthal, 9 F.3d 1016 (2d Cir. 1993). . . . . . . . . . . . . . . . 28, 34 United States v. Royer, 549 F.3d 886 (2d Cir. 2008), petition for cert. filed, (U.S. May 12, 2009) (No. 08-10357). . . . . . . . . . . . . . 56 United States v. Rybicki, 354 F.3d 124 (2d Cir. 2003).. . . . 11, 12, 17, 18, 20-22, 42, 43 United States v. Sawyer, 85 F.3d 713 (1st Cir. 1996).. . . . . . . . . . . . . . .
23, 41
United States v. Sawyer, 239 F.3d 31 (1st Cir. 2001).. . . . . . . . . . . . . . .
23, 32
United States v. Scarpa, 913 F.2d 993 (2d Cir. 1990).. . . . . . . . . . . . . . . . .
26
United States v. Sciandra, 529 F. Supp. 320 (S.D.N.Y. 1982). . . . . . . . . . . . . . .
57
United States v. Scop, 846 F.2d 135 (2d Cir. 1988).. . . . . . . . . . . . . . . . .
31
United States v. Sharifipour, 2006 WL 1007661 (N.D.N.Y. 2006).. . . . . . . . . . . . .
25, 26
United States v. Siembida, 2008 WL 4703015 (S.D.N.Y. 2008).. . . . . . . . . . . . . . .
41
United States v. Silvano, 812 F.2d 754 (1st Cir. 1987). . . . . . . . . . . . . . . . .
41
-ix-
United States v. Skowronski, 968 F.2d 242 (2d Cir. 1992).. . . . . . . . . . . . . . . . .
27
United States v. Stein, 429 F. Supp. 2d 633 (S.D.N.Y. 2006).. . . . . . . . . . . . .
58
United States v. Tannenbaum, 934 F.2d 8 (2d Cir. 1991).. . . . . . . . . . . . . . . .
22, 55
United States v. Theriault, 2007 WL 4377781 (N.D.N.Y. 2007).. . . . . . . . . . . . . . .
60
United States v. Thomas, 116 F.3d 606 (2d Cir. 1997).. . . . . . . . . . . . . . .
46, 47
United States v. Tomero, 496 F. Supp. 2d 253 (S.D.N.Y. 2007).. . . . . . . . . . .
25, 26
United States v. Torres, 901 F.2d 205 (2d Cir. 1990).. . . . . . . . . . . . . . . . .
60
United States v. Vampire Nation, 451 F.3d 189 (3d Cir. 2006).. . . . . . . . . . . . . . . . .
52
United States v. Viertel, 2002 WL 1560805 (S.D.N.Y. 2002).. . . . . . . . . . . . . . .
20
United States v. Von Barta, 635 F.2d 999 (2d Cir. 1980).. . . . . . . . . . . . . . 6, 10, 38 United States v. Wallach, 935 F.2d 445 (2d Cir. 1991).. . . . . . . . . . . . . . . . .
39
United States v. Warner, 498 F.3d 666 (7th Cir. 2007), cert. denied, 128 S. Ct. 1329 (2008). . . . . . . . . . . . .
23
United States v. Washington, 705 F.2d 489 (D.C. Cir. 1983).. . . . . . . . . . . . . . . .
47
United States v. White, 2004 WL 2612017 (E.D.Pa. 2004), aff’d after trial, Kemp, 500 F.3d 257 (3d Cir. 2007). . . . .
14
United States v. Weiss, 491 F.2d 460 (2d Cir. 1974). . . . . . . . . . . . . . . . .
37
-x-
United States v Weyhrauch, 548 F.3d 1237 (9th Cir. 2008),cert. denied, 77 U.S.L.W. 3562 (2009).. . 2, 12, 13, 14, 19, 32, 35, 40, 41, 43 United States v. Woodward, 149 F.3d 46 (1st Cir. 1998).. . . . . . . . . . 3, 13, 15, 23, 39 United States v. Wright, 1990 WL 78035 (N.D. Ill. 1990). . . . . . . . . . . . . . . .
30
United States v. Yashir, 166 F.3d 873 (7th Cir. 1999). . . . . . . . . . . . . . . . .
38
United States v. Yeaman, 987 F. Supp. 373 (E.D. Pa. 1997). . . . . . . . . . . . . . .
27
United States v. Zedner, 555 F.3d 68 (2d Cir. 2008), petition for cert. filed, (U.S. Apr. 28, 2009) (No. 08-10089).. . . . . . . . . . . . .
18
Vasquez v. Hillery, 474 U.S. 254 (1986).. . . . . . . . . . . . . . . . .
47, 48, 50
Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489. . . . . . . . . . . . . . . . . . . . . . . . . 17 FEDERAL STATUTES, RULES, AND OTHER AUTHORITIES U.S. Const. Art. IV, § 4. . . . . . . . . . . . . . . . . . . 18 U.S.C. §§ 1341, 1343, 1346.. . . . . . . . . . . . . .
41
passim
Pub. L. No. 100-690, Title VII, § 7603(a), 102 Stat. 4508 (Nov. 18, 1988).. . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 11 Fed. R. Crim. P. 32.2(b)(1).. . . . . . . . . . . . . . . . . 134 Cong. Rec. H11108-01, 1988 WL 182261 (Oct. 21, 1988).
52
10, 41
134 Cong. Rec. S17360-02, 1988 WL 182529 (Nov. 10, 1988). . .
11
Hearing on H.R. 3089 and H.R. 3050, Fraud Amendment Acts of 1987, Serial 145, H521-87 (May 12, 1988). . . . . . . . . . . . . . 10 S.E.C. Rule 206-(4)-3, 17 C.F.R. §275.206 (4)-3(a)(2).. . . 34,53
-xi-
Association of the Bar of the City of New York, Conflict of Interest and Federal Service 3 (1960) . . . . . . . . . 5, 7, 18 Committee on Standards of Official Conduct, 102d Cong., 2d Sess., Ethics Manual for Members, Officers, and Employees of the United States House of Representatives, Ch. 3 at 3 (1992). . . . . . . 5 1A Kevin F. O’Malley et al., Federal Jury Practice & Instructions § 27.11(“Official Act” Was Lawful - No Defense) (6th ed. 2008).39
-xii-
Introduction and Summary This
Memorandum
is
submitted
as
an
omnibus
response
in
opposition to six motions filed by defendant: three motions to dismiss the Indictment; two motions to strike portions of the Indictment; and a motion to obtain a bill of particulars.
The
Indictment charges defendant, in eight counts, with honest services mail and wire fraud, in violation of 18 U.S.C. §§ 1341, 1343, 1346. The charges are based on more than $3 million in payments to defendant, a public official, from private persons and entities; his failure to disclose material conflicts of interest and material information
in
connection
with
those
payments,
including
his
failure to perform legitimate work for those payments; and related official actions defendant took benefitting private interests. The Indictment alleges that defendant, a State Senator and Senate Majority Leader, “(a) contact[ed] for personal compensation and enrichment, and (b) enter[ed] and attempt[ed] to enter into direct and indirect financial relationships with, persons or entities who were pursuing interests before the Legislature or State agencies,” “conceal[ed], disguis[ed], and fail[ed] to disclose the existence and
nature
of
such
compensated
contacts
and
financial
relationships, and the resulting conflicts of interest,” Indictment ¶ 18, “knowing and believing that his reasonably perceived ability to influence official action would, at least in part, motivate those he contacted to enter into financial relationships beneficial to his personal financial interests, id. at ¶ 19, “did not perform
legitimate work commensurate with the payments,” e.g. id. at ¶ 44, and took “discretionary official action on legislative, funding, contract, and regulatory issues benefitting” the individuals and entities behind those financial interests. Indictment’s
sixty-six
paragraphs
Id. at ¶¶ 34, 59.
detail
the
nature
of
The the
financial relationships and contacts, and resulting conflicts of interest, as well as efforts to conceal, disguise, and fail to disclose pertinent information. Defendant contends the Indictment should be dismissed because (a) § 1346 is unconstitutionally vague, (b) it fails to charge a crime, (c) it violates federalism principles, and (d) the court’s pre-charge to the grand jury was unconstitutional. seeks
to
surplusage,
(e) and
strike
the
(g)
obtain
forfeiture a
bill
of
Defendant also
allegation, particulars.
(f)
strike None
of
defendant’s motions have any merit, and they should all be denied. I.
Honest Services Mail and Wire Fraud Encompasses Failure to Disclose A Material Conflict of Interest or Other Material Information. “The courts have recognized two principal theories of honest
services fraud in cases involving public officials: [1] fraud based on a public official’s acceptance of a bribe and [2] fraud based on a public official’s failure to disclose a material conflict of interest.”
United States v Kincaid-Chauncey, 556 F.3d 923, 942
(9th Cir. 2009) (emphasis added); see United States v Weyhrauch, 548 F.3d 1237, 1247 (9th Cir. 2008) (pre-McNally cases “recognized -2-
two core categories of conduct by public officials . . . sufficient to support an honest services conviction: (1) taking a bribe or otherwise
being
paid
for
a
decision
while
purporting
to
be
exercising independent discretion and (2) nondisclosure of material information”) (emphasis added), cert. denied, 77 U.S.L.W. 3562 (2009); United States v. Kemp, 500 F.3d 257, 279 (3d Cir. 2007) (same), cert. denied, 128 S. Ct. 1329 (2008); United States v. Woodward, 149 F.3d 46, 57 (1st Cir. 1998) (same). The Indictment here charges the second of the two “core categories” of honest services fraud: failure to disclose material conflicts of interest and related material information.1
See
United States v. McDonough, 56 F.3d 381, 391 (2d Cir. 1995) (“Without
disclosing
his
conflict
of
interest”
defendant
“participated in government decisions on insurance matters” and “defrauded Rensselaer County citizens and officials by means of nondisclosure and concealment of information about the kickback scheme that he had a duty to disclose”). Although defendant claims
1
Apparently for tactical reasons, defendant never squarely addresses conflict of interest honest services case law. This omission is puzzling because, in addition to the plain language of the Indictment alleging that defendant failed to disclose conflicts of interest and related information, Indictment ¶ 18, the United States Attorney made clear this basis for prosecution, most recently in a March 2, 2009 letter to Mr. Lowell (Attachment A). Given the fact that the government brought United States v. Kincaid-Chauncey, 556 F.3d 923 (9th Cir. 2009) to defendant’s attention months ago, he should not be allowed to use a reply brief to raise arguments he could, and should, have made on May 1, 2009 when the government would have had a fair opportunity to respond. -3-
that
he
had
no
notice
that
his
conduct
was
prohibited,
the
enactment of § 1346 (in response to McNally v. United States, 483 U.S. 350 (1987)), and § 1346’s application to public officials who fail to disclose material conflicts of interest and other material information is the result of the unremarkable application of wellsettled legal principles to public officials in their capacities as fiduciaries. A.
Pre-McNally Case Law Prohibited, Under the Mail Fraud Statute, Failure to Disclose Material Conflicts of Interest or Other Material Information.
Prior to the passage of § 1346 in 1988, the lower federal courts had ruled that (1) a public official owes a fiduciary duty to the citizenry, see, e.g., United States v. Margiotta, 688 F.2d 108, 124 (2d Cir. 1982) (“[I]ndividuals who in reality or effect are the government owe a fiduciary duty to the citizenry”), United States v. Holzer, 816 F.2d 304, 307 (7th Cir. 1987) (“A public official is a fiduciary toward the public”), vacated and remanded for reconsideration in light of McNally v. United States, 484 U.S. 807 (1987), (2) a public official has an affirmative duty to disclose material information and give notice of conflicts of interest, see Margiotta, 688 F.2d at 128 (“affirmative” “duty to disclose material information or give notice of his conflict of interest” due to defendant “having undertaken basic functions of government”); United States v. Bush, 522 F.2d 641, 651-52 & n. 11 (7th Cir. 1975) (public official, by virtue of his office, had duty
-4-
“to disclose and not conceal facts known to him which he had reason to believe were material”), and (3) the term “scheme to defraud” as used in the mail fraud statute, includes a scheme in which a public official would breach his duty of disclosure. 652 n. 12.
Bush, 522 F.2d at
Such schemes were actionable, even though they did not
involve the deprivation of money or property, because they deprived citizens of the intangible right to honest services of the public official.
Margiotta,
688
F.2d
at
121
(“honest
and
faithful
participation in governmental affairs”); United States v. Mandel, 591
F.2d
1347,
1362
(4th
Cir.
1979)
(“honest,
faithful
and
disinterested services”), aff’d in relevant part, 602 F.2d 653 (1979) (en banc); Bush, 522 F.2d at 646 (“loyal and faithful services”). These holdings, applying the mail fraud statute to a public official’s failure to disclose material conflicts of interest2 or
2
The phrase “conflict of interest” refers to “two interests: one is the interest of the government official (and of the public) in the proper administration of his office; the other is the official’s interest in his private economic affairs. A conflict of interest exists whenever these two interests clash, or appear to clash.” Association of the Bar of the City of New York, Conflict of Interest and Federal Service 3 (1960) (“ABCNY Conflict of Interest Report”); Hayes Int’l. Corp. v. McLucas, 509 F.2d 247, 260 (5th Cir. 1975) (citing ABCNY Conflict of Interest Report); Black’s Law Dictionary 299 (6th ed. 1990) (defining conflict of interest as “refer[ing] to a clash between public interest and the private pecuniary interest of the [public official] concerned”); see also Committee on Standards of Official Conduct, 102d Cong., 2d Sess., Ethics Manual for Members, Officers, and Employees of the United States House of Representatives, Ch. 3 at 3 (1992), available at www.house.gov/Ethics/Ethicforward.html (term “conflict of interest” “denotes a situation in which an official’s conduct of his office -5-
other
material
information,
were
based
on
the
well-settled
principle that fraud includes a fiduciary’s concealment of such information: Fraud in the common law sense of deceit is committed by deliberately misleading another by words, by acts, or, in some instances-notably where there is a fiduciary relationship, which creates a duty to disclose all material facts-by silence. See Prosser and Keeton on the Law of Torts §§ 105-06 (5th ed. 1984). United States v. Dial, 757 F.2d 163, 168 (7th Cir. 1985). As Judge Posner explained in the context of a case involving a public official: Fraud in its elementary common law sense of deceit – and this is one of the meanings that fraud bears in the [mail fraud] statute, see United States v. Dial, 757 F.2d 163, 168 (7th Cir.1985) – includes the deliberate concealment of material information in a setting of fiduciary obligation. A public official is a fiduciary toward the public, including, in the case of a judge, the litigants who appear before him, and if he deliberately conceals material information from them he is guilty of fraud. When a judge is busily soliciting loans from counsel to one party, and not telling the opposing counsel (let alone the public), he is concealing material information in violation of his fiduciary obligations. Holzer, 816 F.2d at 307.3
conflicts “risk of whenever (internal
with his private economic affairs;” “ultimate concern” is impairment of impartial judgment, a risk which arises there is temptation to serve personal interests”) citations and footnotes omitted).
3
In the employer-employee context, the Second Circuit reversed a district court’s dismissal of an indictment where an employee breached his fiduciary duty, and there was a “violation of the employee’s duty to disclose material information to his employer.” United States v. Von Barta, 635 F.2d 999, 1005-07 (2d Cir. 1980); see also United States v. Bronston, 658 F.2d 920, 927-28 (2d Cir. 1981) (lawyer, in disregard of fiduciary duty to firm’s client, -6-
Regulation of conflicts of interest is important because it is “in essence derived, or secondary – one remove away from the ultimate misconduct feared.
The bribe is forbidden because it
subverts the official’s judgment; the gift is forbidden because it may have this effect, and because it looks to others as though it does have this effect.”
ABCNY Conflict of Interest Report at 19-
20; cf. SEC v. Capital Gains Research Bureau, 375 U.S. 180, 196 (1963) (disclosure of conflict of interest required where private motivations of adviser overlap with interests of investor, so investor can evaluate “whether an adviser is serving ‘two masters’ or only one, ‘especially . . . if one of the masters happens to be economic self-interest’”). These reasons for regulating conflicts of interest have not changed, and the Third Circuit, in a post-McNally case explained why conflicts of interest must be disclosed: Were it easy to detect and prosecute public officials for bribery, the need for public officials to disclose conflicts of interest would be greatly reduced. . . . One reason why federal and state law mandates disclosure of conflicts of interest, however, is that it is often difficult or impossible to know for sure whether a public official has acted on a conflict of interest. Cf. Holzer, 816 F.2d at 308 (“How can anyone prove how a judge would have ruled if he had not been bribed?”). The only difference between a public official who accepts a bribe and a public official who receives payments while taking discretionary action that benefits that payor, as Loeper
which was seeking to obtain franchise, concealed and failed to disclose that he was advising and promoting interests of another client in obtaining same franchise, and thus was guilty of mail fraud). -7-
[a state senator at the time] did in this case, is the existence of a quid pro quo whereby the public official and the payor agree that the discretionary action taken by the public official is in exchange for payment. Recognizing the practical difficulties in proving the existence of such a quid pro quo, disclosure laws permit the public to judge for itself whether an official has acted on a conflict of interest. United States v. Panarella, 277 F.3d 678, 697 (3d Cir. 2002). B.
McNally v. United States
In 1987, in McNally v. United States, 483 U.S. 350 (1987) the Supreme Court decided that as a matter of Congressional intent, the mail
fraud
statute
did
not
protect
the
intangible
right
of
citizens to good government, but was “limited in scope to the protection of property rights.”
Id. at 360.
In McNally, an
insurance agency which earned commissions for obtaining worker’s compensation insurance coverage for Kentucky was required, as a condition to continuing as Kentucky’s insurance agent, to share its commissions with a public official and two others through a company they jointly controlled.
Id. at 352-53.
The gist of the offense
was that the public official “did not disclose [his ownership] interest
to
persons
in
state
government
whose
actions
or
deliberations could have been affected by that disclosure.” Id. at 355.
The Court “assume[d]” that requiring the insurance agency to
share commissions did not violate state law and that “it was not illegal under state law for [the public official or the others] to own one of the agencies sharing in the commissions and hence to profit from the arrangement, whether or not they disclosed it to -8-
others in the state government.”
Id. at 361 n.9. The Court stated:
it was not alleged that the mail fraud statute would have been violated had [the public official and the other] reported to state officials the fact of their financial gain. The violation asserted is the failure to disclose their financial interest, even if state law did not require it, to other persons in the state government whose actions could have been affected by the disclosure. It was in this way that the indictment charged that the people of Kentucky had been deprived of their right to have the Commonwealth’s affairs conducted honestly. Id. (emphasis added). After reversing the convictions because the mail fraud statute was limited to the protection of property rights, and did not protect intangible rights of the citizens, the Court remarked, “If Congress desires to go further, it must speak more clearly than it has.” C.
Id. at 360. The Enactment of 18 U.S.C. § 1346
Congress spoke more clearly the following year when it enacted § 1346 as part of the Anti-Drug Abuse Act of 1988.
Pub. L. No.
100-690, Title VII, § 7603(a), 102 Stat. 4508 (Nov. 18, 1988).4 When the House added the text that became § 7603 to the Anti-Drug Abuse
Act
of
1988,
Representative
Conyers,
Chair
of
the
Subcommittee on Criminal Justice, explained that the purpose of this “worthwhile provision” was to “overturn” McNally and restore
4
18 U.S.C. § 1346 provides: “For the purposes of this chapter [63], the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.” -9-
pre-McNally case law:5 Prior to the McNally decision, every Federal appellate court that had considered the scope of the mail and wire fraud provisions held that those provisions protect the right of the public to the honest services of public officials and others responsible for the conduct of public or public affairs, see, e.g., United States v. Margiotta, 688 F.2d 108, 121-22 (2d Cir. 1981), cert. denied, 461 U.S. 913 (1983); United States v. Mandel, 591 F.2d 1347, 1358-64 (4th Cir. 1979); cert. denied, 455 U.S. 961 (1983); the right of a member of an organization to the honest services of the leaders of that organization, United States v. Curry, 681 F.2d 406, 411 (5th Cir. 1982); and the right of employers to the honest service of their employees, United States v. Von Barta, 635 F.2d 999, 1006-07 (2d Cir. 1980), cert. denied, 450 U.S. 998 (1981). This amendment restores the mail fraud provision to where that provision was before the McNally decision. The amendment also applies to the wire fraud provision, and precludes the McNally result with regard to that provision. . . This amendment is intended merely to overturn the McNally decision. No other change in the law is intended. 134 Cong Rec. H11108-01, 1988 WL 182261 (Oct. 21, 1988).6 The Senate voted to pass the bill with the House amendments on October 22, 1988, and on November 10, 1988, Senator Biden submitted
5
Although Representative Conyers ultimately did not vote in favor of the Anti-Drug Abuse Act because it included death penalty and mandatory minimum provisions, he favored the amendment to overrule McNally: “While I am going to vote against the bill, there are, as I indicated earlier, some worthwhile provisions in it.” 134 Cong Rec. H11108-01, 1988 WL 182261 (daily ed. Oct. 21, 1988) (statement of Rep. Conyers). 6
In his remarks, Representative Conyers also referenced a May 12, 1988 hearing, during which the prior case law, the effect of the McNally decision, and the policy implications of overruling it were discussed at length. Hearing on H.R. 3089 and H.R. 3050, Fraud Amendment Acts of 1987, Serial 145, H521-87 (May 12, 1988). -10-
a section-by-section analysis of the “criminal law provisions that are contained in the drug bill” for the President’s consideration which he “believe[d]” would “be helpful to those who wish to know the intent of the drafters of this legislation.”
134 Cong. Rec.
S17360-02, 1988 WL 182529 (Nov. 10, 1988). The analysis of Section 7603 explains: 7603. Intangible Rights for Mail and Wire Fraud-This section overturns the decision in McNally v. United States in which the Supreme Court held that the mail and wire fraud statutes protect property but not intangible rights. Under the amendment, those statutes will protect any person’s intangible right to the honest services of another, including the right of the public to the honest services of public officials. The intent is to reinstate all of the pre-McNally caselaw pertaining to the mail and wire fraud statutes without change. Id. (emphasis added). later.
The President signed the bill eight days
Pub. L. No. 100-690, Title VII, § 7603(a), 102 Stat. 4508
(Nov. 18, 1988). D.
Following McNally, Failure to Disclose a Material Conflict of Interest Or Other Material Information Remains One of the Two “Core Categories” of Honest Services Fraud.
Since § 1346 was enacted, every Court of Appeals to consider the issue has concluded that Congress intended for § 1346 to overrule McNally. See United States v. Rybicki, 354 F.3d 124, 134, 136 (2d Cir. 2003) (in banc) (§ 1346 designed to “overrule” McNally and “reinstated” intangible rights doctrine); United States v. Antico, 275 F.3d 245, 261 n. 16 (3d Cir. 2001) (§ 1346 “enacted to overturn McNally and restore the evolution of mail and wire fraud -11-
to its pre-McNally status”); United States v. Paradies, 98 F.3d 1266, 1283 & n. 32 (11th Cir. 1996) (§ 1346 intended to overrule McNally); United States v. Grandmaison, 77 F.3d 555, 566 (1st Cir. 1996) (same); see also Weyhrauch, 548 F.3d at 1246 (§ 1346 intended to “reinstate” pre-McNally case law).7 As for what “Congress intended when it recriminalized ‘honest services’ fraud,” the Second Circuit, in the private sector honest services fraud case Rybicki, “reviewed the principal pre-McNally decisions involving or purportedly involving ‘honest services’ fraud in the private sector.” Rybicki, 354 F.3d at 138.
Although
the Second Circuit did not consider “[t]he meaning of the phrase ‘scheme or artifice to defraud’ with respect to public corruption cases” because it was not an issue before the court, it noted that it had “been given no reason to doubt that it is susceptible to a similar mode of analysis.”
Id. at 138-39.
Applying the Rybicki approach here (reviewing pre-McNally honest services fraud decisions involving public officials), it is clear that the Indictment falls squarely within the heartland of one of the two “core categories” of public official honest services
7
Three dissenting judges in United States v. Brumley, 116 F.3d 728 (5th Cir. 1997) (en banc) did not believe that § 1346 was intended to overrule McNally, contending instead that “another” in § 1346 did not include the citizens of a state, id. at 737, and that Representative Conyers’ remarks and Senator Biden’s sectionby-section analysis to the contrary were entitled to little weight. Id. at 743 & nns. 4 & 5. Their view has not been adopted by any court. -12-
fraud cases: nondisclosure of material conflicts of interest and related material information.
See Weyhrauch, 548 F.3d at 1247
(both pre- and post-McNally public honest services fraud cases “have generally fallen into one of those two categories”). Indeed, cases decided both before and after McNally provide numerous illustrations of public officials failing to disclose financial arrangements which created conflicts of interest thereby depriving
citizens
of
the
official’s
honest
services.
See
Panarella, 277 F.3d at 681 ($330,000 paid to state senate majority leader for consulting services by tax collection business owner seeking business with local and state governments and opposing pending tax legislation); Woodward, 149 F.3d at 51-53 ($9,000 in meals, rounds of golf, and other entertainment given to state legislator and chair of insurance committee by insurance company lobbyist); Brumley, 116 F.3d at 730-31 (loans to Regional Associate Director of Texas Workers Compensation Commission from lawyers representing claimants before Commission; no claimant was awarded more money); McDonough, 56 F.3d at 384-85 (payment to county democratic chairman’s wife’s insurance agency of 50% of commissions on town and county insurance business); Holzer, 816 F.2d at 305-07 (loans to state court judge by lawyers who had cases before judge and
receivers
influenced
by
who
were
loans);
appointed Margiotta,
by 688
judge;
no
rulings
F.2d
at
113
(50%
were of
commissions on town and county insurance business to brokers
-13-
designated by Republican party town and county chairman); United States v. White, 2004 WL 2612017, at *7 (E.D.Pa. 2004) (loans to city Treasurer by entity seeking business from Treasurer “obvious” conflict of interest); aff’d after trial, Kemp, 500 F.3d 257; see also Weyhrauch, 548 F.3d at 1246 (undisclosed negotiations for future legal work to be performed by legislator for oil company while
legislator
voted
on
and
took
other
action
regarding
legislation of interest to oil company); Antico, 275 F.3d at 249, 253-54 official
(Philadelphia considered
Department applications
of and
Licenses permits
and
Inspections
submitted
by
a
business he created for his ex-wife in lieu of child support payments); United States v. Middlemiss, 217 F.3d 112, 115-16 (2d Cir. 2000) (ownership interest of port authority public affairs officer in cafeteria in port authority); Bush, 522 F.2d at 643 (ownership interest of mayor’s press secretary in advertising agency which obtained city contract for airport advertising); United States v. Keane, 522 F.2d 534, 539-44 (7th Cir. 1975) (financial interest of city councilman in properties affected by city council proceedings in which he participated). Courts, including the Second Circuit, have held that a public official has an affirmative duty to disclose material conflicts of interest or other material information. See Margiotta, 688 F.2d at 128 (“affirmative” “duty to disclose material information or give notice of his conflict of interest” due to defendant “having
-14-
undertaken basic functions of government”); see also KincaidChauncey, 556 F.3d at 945 (“A public official’s duty to disclose material information need not be expressly imposed by statute or code because a public official inherently owes a fiduciary duty to the public to make governmental decisions in the public’s best interest”) (quoting district court jury instructions); Panarella, 277 F.3d at 694 (“A public official has an affirmative duty to disclose material information to the public employer”) (quoting Woodward, 149 F.3d at 57, 62 (1st Cir. 2002)); Bush, 522 F.2d at 651-52 & n. 11 (public official, by virtue of his office, had duty “to disclose and not conceal facts known to him which he had reason to believe were material”). This duty may be breached by misrepresentation, omission, or concealment. See McDonough, 56 F.3d at 391 (in failing to disclose conflict
of
interest,
defendant
“defrauded
Rensselaer
County
citizens and officials by means of nondisclosure and concealment of information about the kickback scheme that he had a duty to disclose;”); see also Panarella, 277 F.3d at 695 (fraud includes “the deliberate concealment of material information in a setting of fiduciary obligation”) (quoting Holzer, 816 F.2d at 307); Bronston, 658
F.2d
at
928
(element
of
concealment
of
material
fact
established). When a material conflict of interest exists, a public official may
not
take
discretionary
action
-15-
directly
benefitting
the
individual or organization behind that financial interest.
Kemp,
500 F.3d at 283 (“honest services fraud encompasses a situation where a public official conceals a financial interest in violation of state criminal law while taking discretionary action that the official knows will directly benefit the individual or organization behind that financial interest”); Panarella, 277 F.3d at 694 (“a public official who conceals a financial interest in violation of state criminal law while taking discretionary action that the official knows will directly benefit that interest commits honest services fraud”). II. A.
Argument
The Honest Services Statute is Not Unconstitutionally Vague as Applied to This Case Because Ordinary People Can Understand That Failure to Disclose Material Conflicts of Interest or Related Material Information is Prohibited. Defendant claims that the honest services fraud statute is
void for vagueness because he did not have notice of “what is a crime and what is not.”
Memorandum in Support of Motion to Dismiss
the Indictment (“Dismissal Memorandum”) at 1.
His argument fails
because ordinary people can understand that failure to disclose material conflicts of interest or related material information is prohibited by Section 1346. “‘As
generally
stated,
the
void-for-vagueness
doctrine
requires that a penal statute define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage -16-
arbitrary and discriminatory enforcement.’”
Rybicki, 354 F.3d at
129 (quoting Kolender v. Lawson, 461 U.S. 352, 357 (1983)).
“‘In
the absence of first amendment considerations, vagueness challenges must be evaluated based on the particular application of the statute and not on the ground that the statute may conceivably be applied unconstitutionally to others in situations not before the Court.’” Rybicki, 354 F.3d at 129-130 (quoting United States v. Coonan, 938 F.2d 1553, 1562 (2d Cir.1991)).
In other words, the
statute must be scrutinized “in light of the specific facts of the case at hand.”
United States v. Nadi, 996 F.2d 548, 550 (2d Cir.
1993). The existence of a scienter element to the offense narrows the reach of the statute and therefore decreases the ambiguity of a criminal offense.
See Hill v. Colorado, 530 U.S. 703, 732 (2000);
Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 499 (“[A] scienter requirement may mitigate a law’s vagueness . . . .”).
Moreover, in order to protect Congress’ power
to regulate criminal activity and the courts’ power to interpret the law, a statute will not be found void merely because it is difficult to determine whether marginal offenses are covered by the statute’s language.
See United States v. Nat'l. Dairy Products
Corp., 372 U.S. 29, 32 (1963). As an initial matter, defendant seems to suggest that Section 1346 is facially vague, Dismissal Memorandum at 9-19; but see id.
-17-
at 11-12 n. 3 (stating that this Court need not reach such issue), but the Second Circuit in banc has stated that Section 1346 is not unconstitutional on its face, see Rybicki, 354 F.3d at 144 (“We conclude that the statute [§ 1346] is not unconstitutional on its face”), and this Court is bound by that holding.
See, e.g., United
States v. Zedner, 555 F.3d 68, 82 n. 3 (2d Cir. 2008) (Second Circuit panel “bound by the decisions of prior panels until such time as they are overruled by an en banc panel of our Court or by the Supreme Court”) (citations and quotations omitted); petition for cert. filed, (U.S. Apr. 28, 2009)(No. 08-10089). Section 1346 is also not void for vagueness as applied to the facts of this case.
Here, defendant failed to disclose material
conflicts of interest and related material information, and an ordinary
person
can
understand
that
(1)
it
is
wrong
for
a
fiduciary, including a public official, to conceal or fail to make such disclosures, see United States v. Geddings, 278 Fed. Appx. 281, 282, 287 n. 8 (4th Cir. 2008)8 (section 1346 provides notice of wrongfulness of conflicts of interest), cert. denied, 129 S. Ct. 435 (2008); see also ACBNY Conflict of Interest Report at 5-6 (“It is interesting, and significant, that contemporary America has shown itself keenly aware of the conflict of interest problem”), and (2) § 1346 prohibits schemes to do so.
8
In fact, such schemes
“[C]itation to unpublished dispositions in the Fourth Circuit is ‘disfavored’ but permissible.” Muntaqim v. Coombe, 366 F.3d 102, 112 n. 12 (2d Cir. 2004). -18-
are so obviously wrong that failure to disclose material conflicts of interest or other material information has long been recognized as one of the two “principal theories” or “core categories” of honest
services
fraud.
Kincaid-Chauncey,
556
F.3d
at
942;
Weyhrauch, 548 F.3d at 1247. As a result, similar void-for-vagueness-as-applied challenges to Section 1346 have been rejected. See United States v. Geddings, 2006 WL 4877548, at *3 (E.D.N.C. 2006) (rejecting public official’s argument that § 1346 is void for vagueness as applied because the “cases demonstrate that failing to disclose a conflict of interest can serve as part of a scheme or artifice to deprive another of the intangible right to honest services”), aff'd Geddings, 278 Fed. Appx. at 282, 287 n.8 (rejecting public official’s void-forvagueness-as-applied challenge to §§ 1341 and 1346 where conviction “based on his failure to disclose a conflict of interest” finding “that
the
language
of
the
statute
provides
notice
of
the
wrongfulness of Geddings’ conduct and adequately prevents arbitrary enforcement”); United States v. Bohonus, 628 F.2d 1167, 1169-70, 1173 (9th Cir.
1980) (rejecting contention, in private sector
honest services fraud case where employee induced insurance agent to pay him portion of agent's commissions but failed to disclose to employer “both his receipt of these payments and his concomitant conflict of interest,” that statute was void for vagueness as applied, explaining that “[t]he numerous decisions which have
-19-
applied § 1341 to employee disloyalty and to the deprivation of intangible rights in general afforded the defendant reasonable notice that his conduct might well fall within the proscriptions of the mail fraud statute. This court has held that it is not ‘. . . unfair to require that one who deliberately goes perilously close to an area of proscribed conduct shall take the risk that he may cross the line.’”).
Section 1346 is therefore not void for
vagueness as applied to this case. Despite the fact that defendant’s conduct falls squarely within the definition of one of the “principal theories” or “core categories” of honest services and that vagueness challenges must be evaluated on an “as-applied” basis,” Rybicki, 354 F.3d at 12930,
defendant
theoretical
offers
boundaries
a
lengthy including
discussion its
of
the
statute’s
application
to
hypothetical situations, Dismissal Memorandum at 9-19.
other But the
facts of this case, which limit defendant’s challenge, involve defendant’s failure to disclose conflicts of interest and related information.
Accordingly,
defendant’s
musings
about
whether
marginal offenses might be covered by § 1346 are inapplicable to his clearly prohibited activities. Similarly, whether or not this precise fact pattern has been the subject of a published opinion is immaterial.
See United
States v. Viertel, 2002 WL 1560805, at *8 (S.D.N.Y. 2002) (noting, in rejecting as applied void-for-vagueness challenge to § 1346,
-20-
that “‘it is immaterial [to a void-for-vagueness analysis] that there is no litigated fact pattern precisely on point’”) (quoting United States v. Ingredient Tech. Corp., 698 F.2d 88, 96 (2d Cir. 1983)); see also United States v. Josephberg, 418 F.Supp.2d 297, 301 (S.D.N.Y. 2005) (“[T]he fact that there is no litigated fact pattern precisely on point may constitute a tribute to the cupidity and ingenuity of the malefactors involved but hardly provides an escape from the penal sanctions. . . .”) (quoting United States v. Brown, 555 F.2d 336, 339-40 (2d Cir. 1977)).
As Judge Raggi
explained in her concurring opinion in Rybicki: Retaining flexibility to recognize that other schemes, not precisely fitting within the models identified by the majority today, could constitute honest services fraud does not establish the vagueness of § 1346. Rather, it acknowledges the reality of fraud, a crime of extraordinary variety, limited only by human imagination. See, e.g., United States v. Altman, 48 F.3d 96, 102 (2d Cir.1995) (holding that fraud needs no definition: “it is as old as falsehood and as versable as human ingenuity” (internal quotation marks and citations omitted)).” 354 F.3d at 155 (Raggi, J. concurring). It is also immaterial that there is disagreement among the circuits regarding whether materiality, as opposed to reasonably foreseeable harm, must be proven, and whether a violation of state criminal law must be proven.
This Circuit has resolved both
questions: it has adopted the materiality test, Rybicki, 354 F.3d at
145-46,
and
does
not
require
Margiotta, 688 F.2d at 124.
a
violation
of
state
law.
Moreover, “divergence in panel or
circuit views of a statute, criminal or otherwise, is inherent -21-
–
and common – in our multi-circuit system. establish vagueness.”
Disparity does not
Rybicki, 354 F.3d at 143; see also United
States v. Tannenbaum, 934 F.2d 8, 12 (2d Cir. 1991) (“We reject Tannenbaum’s attempt to elevate what has become a ‘split in the circuits,’ a not uncommon occurrence, into an argument that § 5313 must
therefore
violate
the
fair
warning
requirement
of
due
process.”) Finally, the scienter requirement for honest services fraud, which
requires
proof
of
“intent
to
deprive
another
of
the
intangible right of honest services,” Rybicki, 354 F.3d at 145, significantly
decreases
any
defendant’s vagueness claim. broad
language
of
the
ambiguity
and
further
defeats
See Margiotta, 688 F.2d at 129 (“The
statute,
intended
by
Congress
to
be
sufficiently flexible to cover the wide range of fraudulent schemes mankind is capable of devising, is not unconstitutionally vague because § 1341 contains the requirement that the defendant must have acted willfully and with a specific intent to defraud.”)9 In sum, defendant cannot establish that he “could not have known that the conduct underlying [his] conviction[] could be
9
Defendant repeatedly cites to a twenty-five-year-old law review article written by the United States Attorney when he was a third-year law student. See March 2, 2009 Letter from then Acting United States Attorney Andrew T. Baxter to Mr. Lowell (Attachment A). To the extent that the article questions whether Congress intended for the mail fraud statute to protect the intangible right to honest services, that question was answered by the enactment of 18 U.S.C. § 1346, five years after the article was published. -22-
considered ‘depriv[ing] another of the intangible right of honest services.’”
United States v. Warner, 498 F.3d 666, 697 (7th Cir.
2007), cert. denied, 128 S. Ct. 1329 (2008); see United States v. Sawyer, 239 F.3d 31, 43 n. 13 (1st Cir. 2001) (summarily rejecting similar argument and stating defendant “also claims that his prosecution offended due process by not giving him sufficient notice of what conduct is proscribed under federal law.
As we have
already noted, Congress enacted § 1346 in 1988 to prohibit schemes to deprive the public of their public officials’ honest services. Accordingly, Sawyer had sufficient notice that his conduct could be prosecuted as a federal crime.”)10
10
Defendant also contends that the use of the phrase “disinterested decision making” renders the Indictment vague, Dismissal Memorandum at 19-20, but that phrase, which is used by the courts to refer to decisions made free of conflicts of interest, Kincaid, 556 F.3d at 944; Panarella, 277 F.3d at 694-95; Antico, 275 F.3d at 263; Middlemiss, 217 F.3d at 120; Woodward, 149 F.3d at 55, 62; United States v. Sawyer, 85 F.3d 713, 724 (1st Cir. 1996), is entirely proper. Indeed, the phrase is included in the Government’s Proposed Jury Instructions (filed today), and its use is not surplusage. See United States v. Derosier, 501 F.3d 888, 897-98 (8th Cir. 2007) (rejecting surplusage argument where “in reckless disregard of the interests of” had been approved in jury instruction as acceptable specification of term “intent to defraud”). Defendant makes a similar complaint about the term “full disclosure of the potential motivation behind official acts,” Dismissal Memorandum at 19-20, but it too is used by courts, Kincaid, 556 F.3d at 944-45; Panarella, 277 F.3d at 695; Antico, 275 F.3d at 263; Woodward, 149 F.3d at 62; Sawyer, 85 F.3d at 724, is included in the proposed jury instructions, and is proper here. -23-
B.
The Allegations of the Indictment are Relevant and Sufficient to Charge Defendant With Honest Services Mail and Wire Fraud. Defendant contends that the allegations of the Indictment do
not amount to a crime, but these arguments are based on mistaken views of the law.
First, based on the misapprehension that the
statute of limitations also operates as a rule of evidence to bar relevant evidence that predates the limitations period, defendant asks the Court to strike relevant allegations in the Indictment and to dismiss the Indictment.
Second, despite the fact a state law
violation is not an element of honest services fraud, defendant takes the position that because the Indictment contains allegations concerning state law (which are made because they are relevant to defendant's intent, to his motive, and for other relevant reasons), a state law violation is therefore an element of the offense. Finally, defendant submits evidence and makes arguments contrary to the allegations of the Indictment. 1.
Acts Which Occurred Before June 30, 2003 are Relevant to the Honest Services Fraud Scheme and May Not Be Stricken Simply Because They Are Outside the Statute of Limitations.
Defendant argues that references to conduct prior to June 30, 2003 should be stricken because acts which occurred outside of the limitations period11 are irrelevant as well as prejudicial and inflammatory, and “allow the government to effectively prosecute 11
The relevant date for the statute of limitations is June 30, 2003 because defendant executed statute of limitations waivers from June 30, 2008 forward. -24-
[defendant] for conduct that is time-barred.”
Memorandum in
Support of Motion to Strike Surplusage (“Surplusage Memorandum”) at 3,
4-5.
Defendant
repeats
these
arguments
in
a
separate
Memorandum in Support of Motion to Dismiss for Failure to Satisfy the Statute of Limitations (“Limitations Memorandum”), and also asserts that if the charged mailings or wires “depend on the previous, time-barred conduct to make out an offense,” then the entire Indictment must be dismissed,
but that “even if they do not
. . . [the] Court must strike from the Indictment those events occurring outside of the limitations period, [and] [w]ith the Indictment altered so significantly, this Court cannot know whether the grand jury would still indict.”
Limitations Memorandum at 12.
The assumption underlying all of these arguments – that the statute of limitations, a rule limiting when prosecutions are brought, somehow bars the admission of relevant evidence – is wrong. The law is settled that a motion to strike surplusage from an Indictment may be granted only if the challenged allegations are “not
relevant
prejudicial.”
to
the
crime
charged
and
are
inflammatory
and
United States v. Mulder, 273 F.3d 91, 99 (2d Cir.
2001); accord United States v. Sharifipour, 2006 WL 1007661, at *10 (N.D.N.Y. 2006).
Courts have interpreted this standard to be
exacting; it is met only in rare cases where it is “clear” that the allegation is both irrelevant and inflammatory and prejudicial. United States v. Tomero, 496 F.Supp. 2d 253, 255 (S.D.N.Y. 2007);
-25-
see also id. (noting that “it has long been the policy [of the courts in the Southern District of New York] . . . to refrain from tampering with indictments”) (quotation omitted). relevant
evidence
may
not
prejudicial the language is.”
be
stricken
Furthermore,
“regardless
of
how
United States v. Scarpa, 913 F.2d
993, 1013 (2d Cir. 1990) (quotation omitted); see also Sharifipour, 2006 WL 1007661, at *10 (“There are two distinct elements to the inquiry; namely, relevance and prejudice.
Thus, the degree of
prejudice is generally of no moment if the allegation is relevant and admissible.”). A statute of limitations is “‘a defense . . . not a rule of evidence . . . [it] has no bearing on the admissibility of evidence.’”
Sir Speedy, Inc. v. L & P Graphics, Inc., 957 F.2d
1033, 1038 (2d Cir. 1992) (civil case) (quoting United States v. Ashdown, 509 F.2d 793, 798 (5th Cir. 1975)); United States v. Cisneros, 203 F.3d 333, 348 n. 13 (5th Cir. 2000) (same).
In other
words, “[s]tatutes of limitation put time limits on when actions may be brought; they are not evidentiary rules that blind courts from consideration of relevant facts”.
Article II Gun Shop, Inc.
v. Gonzales, 441 F.3d 492, 496 (7th Cir. 2006) (quoting and agreeing with the government). As a result, otherwise admissible evidence is not excluded merely because it predates the limitations period.
See United
States v. DeFiore, 720 F.2d 757, 764 (2d Cir. 1983) (stating, in
-26-
the context of evidence offered pursuant to Fed. R. Crim. P. 404(b), “[c]learly, the prior act evidence adduced here went directly to establishing [defendant’s] intent, as well as the preparations and plans that went into the scheme to defraud, and such
evidence
is
admissible
even
though
it
antedates
the
limitations period.”) (internal citation omitted); see also United States v. Read, 658 F. 2d 1225, 1240 (7th Cir. 1981) (“Of course, as in any prosecution, proof of conduct prior to the statute of limitations is admissible to show the scheme and intent.”).
This
rule makes good sense because “[i]t would be a bizarre result indeed if a crime properly prosecuted within the limitations period could not be proven because an essential element, such as intent, could only be established by proof of incidents occurring outside the period.”
Cisneros, 203 F.3d at 348 n.13 (quoting Ashdown, 509
F.2d at 798).12
12
Relying on dicta from cases challenging indictments following conviction, defendant attempts to create law imposing a new limit on indictments: allegations which the government could, but need not, offer at trial must be stricken as surplusage. Surplusage Memorandum at 2, 4. This is clearly not so because courts “may admit evidence that does not directly establish an element of the offense charged, in order to provide background for the events involved in the case.” United States v. Skowronski, 968 F.2d 242, 246 (2d Cir. 1992); see also United States v. Dula, 989 F.2d 772, 777-78 (5th Cir. 1993) (“[i]n developing proof of intent and motive, the prosecution may offer all of the surrounding circumstances that were relevant” including a wire transmission not charged in the indictment because “it was relevant to the existence of the scheme and therefore was independently admissible as direct proof of the scheme charged.”). Not surprisingly, defendant’s argument has been rejected. See United States v. Yeaman, 987 F. Supp. 373, 376-77 (E.D. Pa. 1997) (“Language is properly included -27-
Here, all of the pre-limitations allegations, including those highlighted by defendant, refer to relevant evidence admissible to establish
the
Indictment,
existence
defendant’s
of
the
intent
single to
scheme
defraud,
alleged
his
in
the
motive,
and
pertinent background. The examples highlighted by defendant – such as defendant’s failure to disclose to the Legislative Ethics Committee that he would be contacting labor union officials on behalf of McGinn, Smith, Indictment ¶ 36; defendant’s creation of a sham invoice to make it falsely appear that he had performed work for a $15,000 payment from Leonard J. Fassler when, in fact, he had done nothing, id. at ¶ 43; and his failure to make disclosures required not only by securities laws, but also his contracts with
in an indictment if it pertains to matters which the government will prove at trial. These matters need not be essential elements of the offense if they are in a general sense relevant to the overall scheme charged, or contain relevant background information.”) (citations and quotation marks omitted); United States v. Giampa, 904 F. Supp. 235, 271 (D.N.J. 1995) (“If the Government intends to properly prove a matter at trial, then it is proper for the indictment to include those matters, even if they are not ‘essential elements’ of the crime charged.”) Neither United States v. Rosenthal, 9 F.3d 1016, 1023 (2d Cir. 1993), nor United States v. McIntosh, 23 F.3d 1454, 1457 (8th Cir. 1994) is to the contrary. Those cases rejected arguments challenging convictions where the government did not prove certain allegations in the indictment (in Rosenthal, the district court removed the words “false and fraudulent” from the indictment before instructing the jury, while in McIntosh, the indictment alleged that defendant possessed a gun which did not exist). Indeed, in Rosenthal, the Second Circuit actually concluded that “allegations in an indictment that go beyond the essential elements which are required for conviction do not increase the Government’s burden.” Rosenthal, 9 F.3d at 1023. -28-
Wright Investors’ Service (“Wright”), id. at ¶¶ 25-27 – are clearly relevant to whether defendant devised a scheme to deprive another of the intangible right of honest services, the origin and duration of the scheme, and defendant’s intent and motive, among other issues. In an attempt to strike the pre-limitations allegations, defendant argues that events occurring prior to June 30, 2003 were not in furtherance of the underlying fraud scheme. See Limitations Memorandum at 11.
But this argument is based on a myopic reading
of the indictment, which alleges, for example, that: (1) during the entire time period between 1994 and 2006, defendant “would contact persons or entities who had business before the Legislature or State agencies, including union officials, thereby exploiting his official position for personal compensation and enrichment, knowing and believing that his reasonably perceived ability to influence official
action
would,
at
least
in
part,
motivate
those
he
contacted to enter into financial relationships beneficial to his personal financial interests,” Indictment ¶ 19, (2) defendant contacted at least sixteen unions, id. at ¶ 22, (3) he was paid for clients Wright obtained as a result of defendant’s referral, id. at ¶ 24-26, and (4) eleven union pension funds became Wright clients after his contact, id. at ¶ 28.
The Indictment further alleges
that these payments were made throughout the period between 1994 and 2006, ¶ 21.
As a result, so long as defendant was receiving
-29-
payments (and even while he was merely trying to obtain business from an entity with interests before the legislature), he labored under a substantial conflict of interest whose non-disclosure was material.
Given these allegations, the entire scheme is relevant
evidence and is not barred by the statute of limitations.13
United
States v. Wright, 1990 WL 78035, at *3 (N.D. Ill. 1990) (rejecting argument that references in the indictment to conduct outside the limitations period should be stricken because that argument “runs contrary to the well established principle that events occurring prior to the limitations period are relevant to establish a scheme to defraud and the defendants’ intent.”)
13
Defendant also argues that the McGinn, Smith allegations are irrelevant, Surplusage Memorandum at 6-7, because none of the alleged mailings and wire transmissions directly involve McGinn, Smith, but the absence of a charged mailing or wire transmission directly related to one portion of a single scheme does not undermine the relevance of that evidence. See United States v. Pharis, 298 F.3d 228, 233-34 (3d Cir. 2002) (finding, in mail fraud case where there was a single scheme to inflate consulting bills submitted to insurance company, that the district court was “plainly mistaken” when it concluded that evidence regarding bills charged manually, before the bills were computerized, “could not be part of the mail-fraud scheme” because the charged mailings related to computerized bills and observing that “[i]t is not of any legal significance that the mailings used to bring the scheme under the mail-fraud statute occurred at the end of this single scheme. A fraudulent scheme can span many years with the mailings occurring only at the end of the period.”). Furthermore, the McGinn, Smith allegations are relevant to establishing a scheme because what defendant did for McGinn Smith – directing Wright to use McGinn, Smith as a broker for certain union pension fund accounts defendant solicited for Wright – was inextricably intertwined with defendant’s contact with those same unions for Wright. As a result, defendant was burdened with the same conflicts of interest for payments from McGinn, Smith as he was for payments from Wright. -30-
Indeed, contrary to defendant’s argument, it is quite common for evidence of conduct outside the limitations period to be admitted; the issue the defense normally raises is whether the last mailing or wire was within the limitations period, not that the statute of limitations should operate as a rule of evidence to bar admission of pre-limitations conduct. 974
F.2d
246,
263
(2d
Cir.
1992)
See United States v. Eisen, (“However,
the
statute
of
limitations in a mail fraud case runs from the date of the charged mailing, notwithstanding that the defendant’s actions concerning the scheme to defraud occurred before the statutory period.”); United States v. Scop, 846 F.2d 135, 139 (2d Cir. 1988) (“While it is true that the great majority of criminal acts occurred prior to the limitations date of July 22, 1981, the evidence . . . was sufficient
to
permit
a
rational
jury
to
conclude
that
the
conspiracy and substantive scheme to defraud continued.”); see also United States v. Heacock, 31 F.3d 249, 256-57 (5th Cir. 1994) (evidence
that
defendant
concealed
nature
and
extent
of
his
bookmaking operation from the IRS in sixteen different ways “bears on the existence of the scheme to defraud,” and even evidence relating to events which occurred before the limitations period was properly admitted).
-31-
2.
Evidence Regarding Defendant’s Non-Compliance With State Law is Relevant and Admissible to Defendant’s Intent and Motive, and To Assist the Jury In Understanding the Actions of Participants, But Allegations of State Law in the Indictment Do Not Transform Violation of State Law Into An “Element” of Honest Services Fraud.
Defendant contends that the presence of state law allegations in the indictment has transformed a state law violation into an element of honest services fraud.
Dismissal Memorandum at 36-37.
He is mistaken. In this Circuit (as in most), violation of a state law is not an essential element of honest services mail fraud. Margiotta, 688 F.2d at 124 (“a violation of local law is not an essential element [of mail fraud].”)14 Moreover, evidence of state statutes, and
14
Pre-McNally, the Circuits, including the Second Circuit, took the unanimous view that a state law violation was not an element of honest services fraud and need not be proven. See, e.g., United States v. Martin, 195 F.3d 961, 966 (7th Cir. 1999) (citing cases). Post-McNally, four federal appellate courts (the First, Fourth, Ninth, and Eleventh Circuits) have reached the same conclusion. Weyhrauch, 548 F.3d at 1246; United States v. Hasner, 340 F.3d 1261, 1269 (11th Cir. 2003); Sawyer, 239 F.3d at 41-42; United States v. Bryan, 58 F.3d 933, 940 (4th Cir. 1995). Only the Fifth Circuit has concluded that a state law violation must be alleged and proven in an honest services fraud case, and it has also concluded that violation of a misdemeanor statute is sufficient (and did not need to decide whether a civil violation would be sufficient). United States v. Brumley, 116 F.3d 728, 734, 735-36 (5th Cir. 1997). In Panarella, the Third Circuit stated that it “need not decide whether a violation of state law is always necessary for nondisclosure to amount to honest services fraud,” 277 F.3d at 693, because a violation of Pennsylvania’s misdemeanor disclosure statute was proven. Id. at 694. In United States v. Jennings, 487 F.3d 564 (8th Cir. 2007), the Eighth Circuit did not decide whether a state law violation was necessary because defendant had violated a Minnesota statute requiring disclosure of potential conflicts. Id. at 578. -32-
whether a public official violated or complied with them, is relevant and admissible (1) to show the public official’s intent, see United States v. Jennings, 487 F.3d 564, 580 (8th Cir. 2007) (district
court’s
instructions
“correctly
stated
that
the
compliance or non-compliance with [state disclosure statutes] is only
evidence
relating
to
[defendant-legislator’s]
intent
to
defraud”); United States v. Keane, 522 F.2d 534, 554 (7th Cir. 1975) (district court instructed jury that in deciding whether defendant defrauded citizens of right to have city’s affairs conducted “free from conflict of interest,” jury may consider state statutes and city ordinances, inter alia, “as relevant to the defendant’s intent to defraud if any such intent existed.”), (2) to show motive, see United States v. Brechtel, 997 F.2d 1108, 1115, 1116 (5th Cir. 1993) (in prosecution under 18 U.S.C. § 1006’s “conflict of interests prohibition,” testimony that regulation prohibited interested director transactions “properly tended to demonstrate the defendants’ motive for nondisclosure”), and (3) to assist the jury in understanding the actions and conduct of the participants. See United States v. McElroy, 910 F.2d 1016, 1023-24 (2d Cir. 1990) (evidence of “Regulation U” properly admitted so witnesses
could
explain
basis
for
lending
policies
and
creditworthiness determinations as they related to defendant’s loan application);
see
also
Brechtel,
997
F.2d
at
1115
n.
27
(describing cases in which courts have admitted civil violation
-33-
evidence in criminal prosecutions to show motive and to assist jury in understanding conduct or transactions). Here, the Indictment quotes from state statutes because those statutes are probative of defendant’s intent and motive, and as background to assist the jury in understanding the actions of participants.15 statutes
will
government
Evidence be
of
admissible
anticipates
that
defendant’s for
the
the
same
evidence
demonstrate defendant violated state law.16 Indictment
includes
allegations
violations
regarding
of
purposes, at
trial
those
and
will
the also
The fact that the state
law
does
not
somehow overrule the Second Circuit’s clear holding that proof of a violation of state law is not an element of honest services fraud.
See Rosenthal,
9 F.3d at 1022 (“allegations in an
indictment that go beyond the essential elements which are required for conviction do not increase the Government’s burden”).
15
As discussed infra at 52-54 in connection with defendant’s motion to strike references to SEC Rule 206(4)-3, 17 C.F.R. § 275.206(4)-3(a)(2), as surplusage, evidence regarding that rule is admissible for the same reasons. 16
Such proof would obviate any defense request for the Second Circuit to convene in banc to reconsider that issue. To the extent that there is a difference between a “material conflict of interest” and a “substantial conflict” as the latter term is used in N.Y. Pub. Off. Law § 74(2), both are covered by a fair reading of the allegations in the Indictment, and the evidence at trial will show a violation of both. Cf. United States v. Brechtel, 997 F.2d 1108, 1120 (5th Cir. 1993) (board member of financial institution is “classic fiduciary who owes institution affirmative duty to disclose all potentially substantial conflicts of interest”). -34-
Not only is a state law violation not required, but a state’s failure to make particular activity criminal does not bar federal prosecution pursuant to the mail fraud statute.
See United States
v. Porcelli, 865 F.2d 1352, 1358 (2d Cir. 1989) (mail fraud prosecution for scheme where defendant failed to turn over sales taxes to New York State did not violate due process clause even though, under state law, failure to turn over sales taxes was a civil, not a criminal violation, because “focus” of both wire and mail fraud statutes is upon misuse of wires or mails “not the regulation of state affairs”).
This makes sense “[b]ecause laws
governing official conduct differ from state to state, [and] conditioning mail fraud convictions on state law means that conduct in
one
state
might
violate
the
mail
fraud
statute,
identical conduct in a neighboring state would not.”
whereas
Weyhrauch,
548 F.3d at 1246. 3.
Accepting the Allegations in the Indictment As True, as Required When Assessing the Sufficiency of an Indictment, This Indictment Charges a Valid Offense.
Defendant contends that the Indictment does not charge an offense because (a) certain allegations are not supported with evidentiary detail, and (b) evidence submitted by defendant shows that he did not violate state law.
Defendant, in making arguments
contrary to the allegations in the Indictment and submitting extrinsic
evidence,
has
violated
the
legal
adjudicating a motion to dismiss an indictment.
-35-
principles
for
A defendant moving to dismiss an indictment “must meet a high standard.”
United States v. Lazore, 90 F. Supp. 2d 202, 203
(N.D.N.Y. 2000). In the Second Circuit, “[i]t is well settled that ‘an indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense.’
Hamling v. United States, 418 U.S. 87, 117 (1974).”
United States v. Alfonso, 143 F.3d 772, 776 (2d Cir. 1998).17 Although “an indictment must charge[] a crime with sufficient precision to inform the defendant of the charges he must meet and with enough detail that he may plead double jeopardy in a future prosecution based on the same set of events. . . an indictment need do little more than to track the language of the statute charged and state the time and place (in approximate terms) of the alleged crime.” Id. (internal citation and quotations omitted). Defendant is “entitled to a short, concise statement of facts constituting the offense charged, but he is not entitled to know the evidentiary details with which the government intends to convict him.”
United States v. Cerone, 830 F.2d 938, 951 (8th Cir.
1987) (indictment charging that defendant traveled in interstate
17
Materiality is an element of the offense at trial, but sections 1341, 1343, and 1346 do “material,” and an indictment need not “material.” United States v. Klein, 476 F.3d cert. denied, 128 S. Ct. 804 (2007). -36-
which must be proven not contain the word include the word, 111, 113 (2d Cir.),
commerce with intent to promote illegal activity need not specify particular acts that defendant did in furtherance of illegal activity); see United States v. Weiss, 491 F.2d 460, 466 (2d Cir. 1974) (unnecessary to allege more specifically than failure to produce documents conduct by which defendants corruptly endeavored to obstruct justice; “such details need not be alleged”); see also United States v. Musacchio, 968 F.2d 782, 787 (9th Cir. 1991) (government
not
required
to
“list
supporting
evidence”
in
indictment); United States v. Moody, 923 F.2d 341, 351 (5th Cir. 1991) (indictment need not set out “evidentiary details”); United States v. Muskovsky, 863 F.2d 1319, 1326-27 (7th Cir. 1988) (in Travel
Act
prosecution,
no
requirement
that
indictment
“specifically identify” the “illegal acts [defendants] performed or facilitated following their use of interstate facilities”). The government is not making “a full proffer of the evidence it intends to present at trial” and therefore, sufficiency of the evidence is not in issue here.
United States v. Alfonso, 143 F.3d
772, 776 (2d Cir. 1998); United States v. Elliott, 363 F. Supp. 2d 439, 450 (N.D.N.Y. 2005); see United States v. Bicoastal Corp., 819 F. Supp. 156, 158 (N.D.N.Y. 1993) (citations omitted) (“It has long been held that the criminal analog to civil summary judgment motions, referred to in the colloquialism of the past as ‘speaking motions,’ are not allowed by Fed. R. Crim. P. 12(b).”)
-37-
In assessing the sufficiency of an indictment, the court must “examine the indictment as a whole, accept as true the facts alleged, and determine only whether the indictment is valid on its face.”
United States v. Elliott, 363 F. Supp. 2d 439, 450
(N.D.N.Y. 2005).
In addition to assuming that all facts in the
indictment are true, the Court must “‘view all facts in the light most favorable to the government.’” United States v. Rezko, 2007 WL 2904014, at *3 (N.D. Ill. 2007) (quoting United States v. Yashir, 166 F.3d 873, 880 (7th Cir. 1999)).
“The defendant’s contrary
assertions of fact will not be considered.” Barta, 635 F.2d 999, 1002 (2d Cir. 1980).
United States v. Von .. . . . . .
Applying these principals, it is clear that the Indictment is sufficient.
The
Indictment
alleges
that
defendant
took
discretionary action benefitting the labor unions, Leonard J. Fassler, Jared E. Abbruzzese, Russell C. Ball and/or their related entities, and this Court must accept this allegation as true even though the evidentiary details on which these allegations are based are not contained in the Indictment.18
18
In addition to the Indictment, as discussed in more detail infra at 60-61, the government has also provided defendant with “documents of particular relevance” which identify official actions defendant took and his extensive involvement in legislation, grants, and behind-the-scenes activity benefitting the labor unions, Fassler, Abbruzzese, and Ball. As a result of the production of the “documents of particular relevance,” defendant is aware of documentation concerning his official acts and appears to be making a technical pleading argument. But under applicable law, there is no need for the government to include such allegations in the indictment. -38-
Defendant also contends that the Indictment is insufficient because it does not “identify a single official act that was compromised by Mr. Bruno’s alleged self-interest, motivations, or by an actual conflict of interest,” Dismissal Memorandum at 20. But the government need not prove that the defendant’s actions resulted in a tangible loss to the public. Jennings, 487 F.3d at 580; Woodward, 149 F.3d at 54-55; cf. United States v. Wallach, 935 F.2d 445, 463-64 (2d Cir. 1991) (scheme to conceal true nature of dealings and ultimate recipients of payments violates mail fraud statute), nor does the government need to prove that the concealed financial interests improperly influenced any official actions. Panarella, 277 F.3d at 680; Kincaid-Chauncey, 556 F.3d at 943-44. Furthermore, it is not a defense to honest services fraud that,
had
there
been
no
deprivation
of
the
right
to
honest
services, the defendant might have lawfully and properly performed the same act, or that the actions taken by the defendant were desirable or beneficial to the public. Cf., e.g., United States v. Orenuga, 430 F.3d 1158, 1165-66 (D.C.Cir. 2005) (instruction that “[i]t is not a defense to the crime of bribery that had there been no bribe, the public official might have lawfully and properly performed the same act” not erroneous); 1A Kevin F. O’Malley et al., Federal Jury Practice & Instructions § 27.11(“Official Act” Was Lawful - No Defense) (6th ed. 2008); see also City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 378 (1991) (“A mayor is guilty of accepting a bribe even if he would and should -39-
have taken, in the public interest, the same action for which the bribe was paid.”) Finally, the Indictment alleges that defendant made false statements on his annual statements of financial disclosure, and the Court must accept this allegation as true.
Neither the
evidence defendant submitted, nor his argument, can undermine the allegation for purposes of his motion to dismiss.19 In sum, the Indictment here is more than adequate to survive a motion to dismiss.
The allegations are plainly sufficient to
inform defendant of the charges which he must meet, and place this case within the heartland of honest services fraud cases.
This
case should proceed to trial. C.
The Honest Services Fraud Statute is a Clear Exercise of Congress’s Power and Does Not Violate Any Federalism Principles.
Both before and after McNally, Courts of Appeals have rejected federalism challenges to honest services fraud prosecutions of public officials because Congress may prohibit use of the mail “in furtherance of a scheme that it regards as contrary to public policy, whether it can forbid the scheme or not.”
19
Badders v.
Similarly, defendant’s contention that he merely held lawful part-time employment contradicts the allegations that he did not perform legitimate work commensurate with payments he received, Indictment ¶¶ 44, 51, 55, and that the only services he provided to Wright was to contact union officials who had interests before New York State, understanding that his official position would provide Wright with opportunities to obtain and retain business from union funds that would not, in the absence of his official position, otherwise have been available. Id. at ¶ 31. -40-
United States, 240 U.S. 391, 393 (1916); see Weyhrauch, 548 F.3d at 1246 (post-McNally honest services fraud case involving conduct of then-Alaska legislator); Sawyer, 85 F.3d at 723-24 (post-McNally honest services fraud case involving conduct of lobbyist regarding Massachusetts legislator); United States v. Castro, 89 F.3d 1443, 1456 (11th Cir. 1996) (post-McNally honest services fraud case involving conduct of state court judge); United States v. Silvano, 812 F.2d 754, 758 (1st Cir. 1987) (pre-McNally honest services fraud case involving conduct of Boston budget director); cf. Margiotta, 688 F.2d at 124 (relying on Badders, holding that state law violation is not an essential element of mail fraud). The same analysis supports the constitutionality of honest services wire fraud.
Cf. United States v. Siembida, 2008 WL 4703015, at *5
(S.D.N.Y. 2008) (rejecting argument that “a conviction based upon a facially intrastate communication that only incidentally crossed state
borders
exceeds
Congress’s
Commerce
Clause
power
to
regulate”). Additional authority for Section 1346 explicitly invoked by Representative Conyers is the Guarantee Clause. See 134 Cong. Rec. H11108-01, 1988 WL 182261 (daily ed. Oct. 21, 1988) (statement of Rep. Conyers) (“Some questions were raised during the Criminal Justice Subcommittee’s hearing on the McNally decision regarding the Federal Government’s constitutional role in prosecuting State
-41-
and local corruption. I believe that the guarantee clause of the U.S.
Constitution,
article
IV,
section
4
can
be
used
as
a
constitutional basis for Congress to pass criminal legislation relating to corruption in local government. See, A. Kurland, “The Guarantee Clause as a Basis for Federal Prosecutions of State and Local Officials” 62 So. Cal. [Law] Rev. [367 (1989)]. The fact that Congress has the power to enact a statute like the honest services fraud provision was even alluded to by the Supreme Court in McNally: It may well be that Congress could criminalize using the mails to further a state officer’s efforts to profit from governmental decisions he is empowered to make or over which he has some supervisory authority, even if there is no state law proscribing his profiteering or even if state law expressly authorized it. But if state law expressly permitted or did not forbid a state officer such as Gray to have an ownership interest in an insurance agency handling the State’s insurance, it would take a much clearer indication than the mail fraud statute evidences to convince us that having and concealing such an interest defrauds the State and is forbidden under federal law. 483 U.S. at 361 n. 9. Finally, to the extent that the Supreme Court may require Congress to speak clearly when creating federal criminal laws in areas traditionally regulated by the states, see Rybicki, 354 F.3d at 137 n. 10 (“Perhaps it can be argued nonetheless, in light of the Supreme Court’s later Commerce Clause cases, that if Congress wants to federalize such crimes it should do so in definite terms”), the Second Circuit has already concluded that “when
-42-
Congress enacted section 1346 in the light of the pre-McNally cases, it spoke with sufficient clarity to obviate the danger that federal courts, rather than Congress, would determine how deeply into traditionally state concerns the federal government ventured,” id. In sum, “Congress has a legitimate interest in ensuring that state
action
influenced
affecting
by
personal
federal
priorities
motivations
of
is
state
not
improperly
policymakers
and
regulators, and the happenstance of whether state law prohibits particular conduct should not control Congress’ ability to protect federal interests through the federal fraud statutes, which are predicated on valid federal constitutional authority to regulate the mails.” D.
Weyhrauch, 548 F.3d at 1246.
The Model Grand Jury Charge is Not Unconstitutional.
Defendant challenges the constitutionality of the Federal Judicial Conference’s Model Grand Jury Charge (March 2005) (the “model charge”). Defendant’s argument – that portions of the model charge infringe on the grand jury’s right to refuse to indict even when presented with evidence establishing probable cause (in effect a grand jury nullification argument) and improperly vouch for prosecutors
thereby
encouraging
deference
to
their
judgment
regarding probable cause, Memorandum in Support of Motion For Disclosure of the Grand Jury Charge and to Dismiss the Indictment (“Grand Jury Memorandum”) at 6-15, – have been rejected by both
-43-
Circuit courts which have considered whether the model charge is constitutional. Assuming, arguendo, that the magistrate judge used the model charge when instructing the grand jury which returned this Indictment, this Court should reach the same conclusion.20 Defendant focuses on four portions of the model charge which instruct grand jurors that they (1) they “cannot judge the wisdom of the criminal law enacted by Congress,” (the “wisdom of the law” instruction), (2) they “should not consider punishment in the event of conviction” when deciding whether to indict, (the “punishment” instruction), (3) their “task is to determine” whether the evidence presented is sufficient to “cause you to conclude that there is probable cause to believe that the accused is guilty of the offense charged.
To put it another way, you should vote to indict where
the evidence presented . . . is sufficiently strong to warrant a reasonable person’s belief that the person being investigated is probably guilty of the offense charged,” (the “task” and “should indict”
instruction),
and
(4)
“[i]f
past
experience
is
any
indication of what to expect in the future, then you can expect candor,
honesty
and
good
faith
20
in
matters
presented
by
the
It is not clear that the “particularized need” standard argued by defendant, Grand Jury Memorandum at 3-4, is applicable. See United States v. Alter, 482 F.2d 1016, 1029 n. 21 (9th Cir. 1973) (“The proceedings before the grand jury are secret, but the ground rules by which the grand jury conducts those proceedings are not.”) Regardless of the applicable standard, however, defendant has not shown any basis to obtain the charge because the model charge is constitutional. -44-
government
attorneys”
instruction).
(the
“candor,
honesty,
and
good
faith”
Model Charge at ¶¶ 9, 10, 25, and 31.
The Ninth Circuit has rejected each and every one of these arguments.
See United States v. Narvarro-Vargas, 408 F.3d 1184,
1202, 1204, 1206, 1208 (9th Cir. 2005) (en banc) (holding that the challenged instructions of the model charge –
the “wisdom of the
criminal laws,” “task and should indict,” and “candor, honesty, and good faith” instructions – are constitutional); United States v. Adams,
343
F.3d
1024,
1027
n.1
(9th
Cir.
2003)
(summarily
concluding, after appellant argued in his brief that the district court
erred
by
giving
the
grand
jurors
the
“punishment”
instruction, see Adams’ Opening Brief at 11, that “the model charge did not misstate the constitutional role and function of the grand jury” thereby affirming that portion of the model charge without discussion).
See also United States v. Cedano-Arellano, 332 F.3d
568, 573 (9th Cir. 2003) (holding that it was proper to instruct grand jury that “they had a duty to indict him if they found probable
cause
to
believe
he
was
guilty”);
United
States
v.
Marcucci, 299 F.3d 1156, 1159-65 (9th Cir. 2002) (holding that the model charge was not unconstitutional after examining the “should indict” instruction and holding that it was not error to refuse to give a grand jury nullification charge). The Eleventh Circuit, in reviewing, inter alia, instructions, which it concluded were “significantly similar to the Navarro-
-45-
Vargas [wisdom of the law and should indict] instructions,” decided to “follow Navarro-Vargas because its reasoning is sound.”
United
States v. Knight, 490 F.3d 1268, 1272 (11th Cir. 2007), cert. denied, 128 S. Ct. 547 (2007).
As the Eleventh Circuit explained,
“The grand jury could easily understand it was independent from the court and could indict or not based upon the evidence.”
Id.
at
1272; see also United States v. Hooks, 2005 WL 3370549, at *14 (W.D. Tenn. 2005) (“The Court finds the reasoning of the Ninth Circuit to be persuasive.
Because neither [the wisdom of the law
nor
instruction
the
should
indict]
alters
or
restricts
the
independence and discretion of the grand jury, nor is inconsistent with its constitutional role and function, the Court concludes that the purported instructions are not in violation of the Fifth Amendment.”). Setting aside for the moment the “candor, honesty, and good faith” instruction, defendant’s remaining arguments all challenge perceived limits on the grand jury’s ability to nullify.21
But the
Second Circuit, in the context of trial juries, has strongly condemned nullification, describing it as a power, not a right to be encouraged or even knowingly permitted.
See United States v.
Thomas, 116 F.3d 606, 614, 615 (2d Cir. 1997) (“We categorically
21
Although it is tempting to view nullification as an expression of the community’s conscience as reflected in “acquittals in fugitive slave cases,” in reality, however, there are also “shameful examples of how nullification has been used to sanction murder and lynching.” Thomas, 116 F.3d at 616. -46-
reject the idea that, in a society committed to the rule of law, jury nullification is desirable or that courts may permit it to occur when it is within their authority to prevent. . . . [T]he power of juries to ‘nullify’ or exercise a power of lenity is just that – a power; it is by no means a right or something that a judge should encourage or permit if it is within his authority to prevent.”).
Indeed, “[a] jury has no more ‘right’ to find a
‘guilty’ defendant ‘not guilty’ than it has to find a ‘not guilty’ defendant guilty, and the fact that the former cannot be corrected by a court, while the latter can be, does not create a right out of the power to misapply the law.
Such verdicts are lawless, a denial
of due process and constitute an exercise of erroneously seized power.”
Id. at 615-16 (quoting United States v. Washington, 705
F.2d 489, 494 (D.C. Cir. 1983) (per curiam)). As a result of these principles, in the Second Circuit, criminal defendants are not entitled to a jury nullification instruction at trial.
Id. at 616 n.9.
These sound principles have
equal force in the context of grand juries. Not surprisingly then, there
is
no
constitutional
authority right
to
supporting instruct
the a
idea
grand
that
jury
there
that
it
is
a
“has
unlimited discretion to decide whether to indict even when it finds probable cause.”22
Marcucci, 299 F.3d at 1161.
22
The Supreme Court’s statement in Vasquez v. Hillery, 474 U.S. 254, 263 (1986) that “‘[t]he grand jury is not bound to indict in every case where a conviction can be obtained.’ United States v. -47-
Given that it is inappropriate to instruct the grand jury regarding nullification, it is entirely appropriate that the grand jury should be instructed not to consider punishment23 or the wisdom of the law because such concerns are irrelevant to probable cause and would only go to nullification.
See Navarro-Vargas, 408 F.3d
at 1204 (“we cannot say that the grand jury’s power to judge the wisdom of the laws is so firmly established that the district court must either instruct the jury on its power to nullify the laws or remain silent”). This also holds true for instructing the grand jury that it “should” indict upon finding probable cause.
The use of the word
“should,” as opposed to a command such as “must” or “shall,” “does not ‘eliminate discretion on the part of the grand jurors,’ leaving room for the grand jury to dismiss even if it finds probable cause.” Id. at 1205-06
(quoting Marcucci, 299 F.3d at 1159).
Moreover,
terms
the
singular
“purpose”
and
“task,”
do
not
“undermine the grand jury’s purpose and function” because the
Ciambrone, 601 F.2d 616, 629 (2d Cir. 1979) (Friendly, J., dissenting),” does not undermine this analysis. In Vasquez, the Supreme Court reversed an African-American’s murder conviction because, even though he received a fair trial, he had been indicted by a grand jury from which African-Americans had been excluded, 474 U.S. at 262. The constitutionality of the model grand jury instruction was not at issue, and the statement merely acknowledges the reality that grand juries sometimes nullify; it does not create any right to a nullification instruction. 23
It is well established that when a jury has no sentencing function, it should be instructed not to consider punishment. Shannon v. United States, 512 U.S. 573, 579 (1994). -48-
instruction also “remind[s] the grand jury of its independence from the federal government” by stating that it has “extensive powers” and “in a very real senses stand[s] between the government and the accused] and leaves room for it to refuse to indict.” NavarroVargas, 408 F.3d at 1206. As for the “candor, honesty, and good faith” instruction, it “balance[s] the praise for the government’s attorney by informing the grand jurors that some have criticized the grand jury as a ‘mere rubber stamp’ to the prosecution and remind[s] them that the grand jury is ‘independent of the United States Attorney[.]’” at 1207.
Id.
Moreover, it “is not vouching for the prosecutor, but is
closer to advising the grand jury of the presumption of regularity and good faith that the branches of government ordinarily afford each other.”
Id.
Read as a whole, the instruction “surely does
not threaten the constitutional relationship between the prosecutor and grand jury.”
Id. at 1207-08.
Defendant has certainly not established that any portion of the
model
grand
collectively,
is
jury
charge,
unconstitutional,
considered and
has
individually not
offered
or any
persuasive reason to distinguish the Ninth and Eleventh Circuit’s rejection of his arguments.24
24
The withdrawn and dissenting Ninth Circuit opinions defendant relies upon, Grand Jury Memorandum at 9-16, are fully answered by the majority opinions, and defendant cites no other opinion concluding that the model charge is unconstitutional. -49-
Defendant has also made absolutely no showing that he was prejudiced by the court’s charge, and asks that prejudice be presumed.
However, “as a general matter, a district court may not
dismiss an indictment for errors in grand jury proceedings unless such errors prejudiced the defendants.”
Bank of Nova Scotia v.
United States, 487 U.S. 250, 254 (1988); id. at 256 (“[D]ismissal of the indictment is appropriate only if it is established that the violations substantially influenced the grand jury's decision to indict, or if there is grave doubt that the decision to indict was free from substantial influence of such violations.”) (citations and quotation marks omitted).
The instructions in question do not
amount to structural defects for which prejudice is presumed.
See
id. at 256-57; see also Vasquez v. Hillery, 474 U.S. 254, 261, 263-64 (1986) (exclusion of blacks from service as grand jurors undermines structural integrity of criminal tribunal and is not amenable to harmless error review); Ballard v. United States, 329 U.S. 187, 189-90 (1946) (exclusion of women from grand jury was error requiring dismissal of indictment). Given the fact that the model charge is not unconstitutional, and defendant has made no showing of prejudice, his motion should be denied. E.
The Forfeiture Allegation Should Not be Stricken. Defendant moves to strike the forfeiture allegation on the
ground that it “fails to identify the specific property that the
-50-
government believes is subject to forfeiture.”
Memorandum in
Support of Motion to Strike the Forfeiture Allegations (“Forfeiture Memorandum”) at 1. Recognizing that this contention is contrary to Second Circuit law, id. at 2, defendant asks this Court to follow what
he
contends
is
the
law
in
other
circuits.
Forfeiture
Memorandum at 2-3. In the Second Circuit, allegations which track the language of the applicable forfeiture statute are sufficient. United States v. Grammatikos, 633 F.2d 1013, 1024 (2d Cir. 1980); United States v. Rigas, 281 F. Supp. 2d 660, 672 (S.D.N.Y. 2003); see also United States
v.
Peters,
2009
WL
763384,
at
*4
(W.D.N.Y.
2009)
(“Indictments containing no more than a tracking of language in the applicable forfeiture statutes are therefore sufficient.”).
In
Grammatikos, the Court held that “[t]he plain language of Rule 7(c)(2) requires only that the extent of the interest or property subject
to
forfeiture
“grammatically require
the
forfeiture.”
be
implausible” government
to
alleged,” an
and
noted
interpretation
allege
the
that of
“property
the
it
found
Rule
to
subject
to
633 F.3d at 1024.
Here, the government has alleged, in the words of the statute, that defendant shall forfeit “his interest in any and all property, real or personal, which constitutes or is derived from proceeds traceable to” the violations alleged in Counts 1-8, to include a “money judgment representing the total dollar amount derived from
-51-
said violations.”
Indictment ¶ 68.
In accordance with Fed. R.
Crim. P. 32.2(b)(1), the government here seeks a “personal money judgment,” not “forfeiture of specific property.25
Such an in
personam judgment is properly sought pursuant to the forfeiture statute, see United States v. Vampire Nation, 451 F.3d 189, 198 (3d Cir. 2006) (district court properly entered in personam forfeiture judgment against defendant for proceeds of mail fraud); accord Jennings, 487 F.3d at 585, even for proceeds obtained before the forfeiture statute was enacted in August 2000.
Id. at 583, 585-86
(in scheme to deprive Minnesota of legislator’s honest services, forfeiture of “scheme proceeds that benefitted him personally” did not violate Ex Post Facto clause even though statute authorizing such forfeiture became effective in August 2000). To
the
extent
that
cases
from
other
circuits
cited
by
defendant hold, contrary to Grammatikos, that when the government is seeking to forfeit specific property it must specify such property in the indictment, those cases are inapplicable here because the government is seeking only a personal money judgment. Moreover, two of the cases cited by defendant hold that where (as here) the government is seeking substitute assets, such property
25
After a defendant has been found guilty, Fed. R. Crim. P. 32.2(b)(1) directs the Court to “determine what property is subject to forfeiture. If the government seeks forfeiture of specific property, the court must determine whether the government has established the requisite nexus between the property and the offense. If the government seeks a personal money judgment, the court must determine the amount of money that the defendant will be ordered to pay.” -52-
need not be listed in the indictment.
United States v. Parrett,
530 F.3d 422, 426 n. 3 (6th Cir. 2008); United States v. Hatcher, 323 F.3d 666, 673 (8th Cir. 2003) (indictment need not “specify what property will be sought as substitute assets”). Because the government need not “identify specific property” that it believes is “subject to forfeiture,” defendant’s motion to strike the forfeiture allegation should be denied. F.
None of the Language in the Indictment is Surplusage. Defendant
asks
the
Court
to
strike
as
surplusage
all
references to SEC Rule 206-(4)-3, 17 C.F.R. § 275.206(4)-3(a)(2), as well as the phrases Indictment
¶¶
20,
“dishonest services” and “sham invoice,”
43.26
These
references,
which
are
neither
inflammatory nor prejudicial, are all relevant to the charged crimes and should therefore not be stricken. 1.
Allegations Regarding SEC Rule 206-(4)-3 are Relevant Evidence Regarding Defendant’s Intent and Motive and As Background.
Defendant contends that SEC Rule 206-(4)-3 is not relevant because the rule imposes obligations on investment advisers, not solicitors.
Surplusage Memorandum at 8.
This argument relies on
mistaken assumptions of fact and law.
26
For the reasons discussed supra at 24-31, the statute of limitations does not bar the admission of evidence regarding conduct which occurred before June 30, 2003, and those relevant allegations should not be stricken as surplusage. -53-
Contrary to defendant’s assumption regarding the facts of this case, the government will offer evidence to show that defendant was aware of the rule (which he discussed with others) and that he had a contractual obligation to comply with it.
Evidence will also be
offered to show that defendant took actions regarding compliance with and/or avoidance of the rule in connection with the scheme while soliciting union officials. The rule is therefore admissible on the issue of defendant’s intent; see United States v. Nappy, 1995 WL 702363, at *2 (S.D.N.Y. 1995) (refusing to strike language regarding a Securities and Exchange Commission bar as surplusage because “[i]f, as the government contends . . . the proof will show that defendant concealed the . . . order as an integral part of the alleged schemes to defraud, then the bar order is relevant”); see also United States v. Parker, 364 F.3d 934, 942 (8th Cir. 2004) (finding testimony regarding scope and substance of FTC franchise rule was relevant to intent to deceive in mail fraud prosecution where there was evidence that defendant’s employer was subject to FTC
franchise
rule,
and
defendant,
who
knew
he
was
selling
franchises, was aware of the rule’s obligations); United States v. Parks, 68 F.3d 860, 866 (5th Cir. 1995) (“Evidence of violations of civil banking regulations cannot be used to establish criminal conduct . . . [but] may, however be admitted for the limited purpose of showing . . . motive or intent to commit the crime charged.”) (internal citations omitted), as well as motive and
-54-
background, see supra at 32-33. Defendant’s legal analysis – that the rule’s obligations were imposed solely on Wright, not defendant –
is also unsound because
it ignores accessorial liability principles.
Any person, even a
solicitor, who aids, abets, counsels, commands, procures, or causes a
criminal
violation
of
the
rule
has
the
same
criminal
responsibility as a principal even though he himself lacks the legal capacity to commit the offense.
See United States v.
Tannenbaum, 934 F.2d 8, 14 (2d Cir. 1991) (“[t]he inability to commit the substantive offense is immaterial.
If the defendant
‘willfully causes’ someone who has the legal capacity to commit the substantive offense, the defendant may be convicted under § 2(b); if the defendant ‘aids and abets’ the commission of the substantive offense by another who possesses the legal capacity to commit the substantive crime, the defendant may be convicted under § 2(a).”); see also United States v. Ozbay, 2007 WL 656049, at *3 (N.D.N.Y. 2007) (“Aiding and abetting, or causing or inducing another to commit a crime must be determined by one’s overt conduct, acts and statements; although it is not necessary that the acts alleged to have
constituted
aiding
and
abetting
be
criminal
in
and
of
themselves.”) (citation omitted). Defendant’s contention that references to the rule should be stricken because the rule’s obligations did not apply to him should therefore be rejected.
-55-
2.
The Phrases “Dishonest Services” and “Sham Invoice” are Accurate Descriptions of Relevant Evidence.
Defendant also contends that both the phrases “dishonest services,”
Indictment ¶ 20, and “sham invoice,” Indictment ¶ 43,
should be stricken, but offers no convincing reason why they are clearly irrelevant and inflammatory and prejudicial.
Both phrases
accurately describe evidence the government will present and are therefore relevant. The
term
“dishonest
services”
is
merely
an
alternative
statement of defendant’s alleged criminal conduct – his deprivation of the citizens of their right to his honest services – which is grounded in honest services case law.
See United States v. Royer,
549 F.3d 886, 900 n. 14 (2d Cir. 2008) (“Although [defendant] contends that the Government failed to show any detriment to his subscribers, this is plainly untrue, since they paid him $200-$600 for his honest services and received dishonest services instead.”) (emphasis added), petition for cert. filed, (U.S. May 12, 2009) (No. 08-10357); Brumley, 116 F.3d at 735 (“A sitting state official with adjudicatory authority who accepts payments from lawyers practicing in front of him and simultaneously acts for those lawyers in his official capacity contrary to his state-law duty has provided dishonest services.”) (emphasis added); United States v. Proffitt, 2008 WL 2225734, at *3 (W.D. Mo. 2008) (“While defendant contends that there is no allegation of dishonest services in this
-56-
case, that is clearly not the case.”) (emphasis added).
Defendant
has offered no explanation of how the phrase is clearly irrelevant and
his
conclusory
inflammatory”
cannot
assertion be
a
that
grounds
it
for
is
“superfluous
concluding
that
and
it
is
surplusage. As for the word “sham,” it is defined as “[s]omething that is not what it seems; a counterfeit.” Black’s Law Dictionary (8th ed. 2004).
The government will offer evidence at trial to show that
after defendant received a $15,000 check from Fassler in 1997, he prepared an invoice to create the false appearance that the check was a payment for work when, in fact, no legitimate work was performed.
Under these circumstances, use of the word “sham”
succinctly conveys the fact that the invoice was “not genuine,” and helps to explain why defendant’s conduct was illegal.
See United
States v. Ferguson, 478 F. Supp. 2d 220, 235 (D. Conn. 2007) (refusing to strike “phony,” “fake,” and “sham”); United States v. Stein, 429 F.Supp. 2d 633, 647 (S.D.N.Y. 2006) (refusing to strike “tax haven,” “phony,” and “concoct”); United States v. Sciandra, 529 F. Supp. 320, 322 (S.D.N.Y. 1982) (refusing to strike “sham” where
the
court
found
the
“government’s
argument
that
such
descriptions are not only relevant but are, in fact, the gist of the case . . . entirely convincing”). stricken.
-57-
It should therefore not be
3.
Defendant’s Motion To Strike Surplusage Should Be Denied For the Independent Reason That He Has Failed To Show That the Allegations Are Inflammatory and Prejudicial.
In addition to being relevant, defendant has failed to show that any of the allegations he has moved to strike are inflammatory and prejudicial.
See Stein, 429 F. Supp. 2d at 647 (defendants
failed to show how references to personal wealth and description of one defendant as leader was sufficiently prejudicial to warrant relief);
United
States
v.
Heatley,
994
F.
Supp.
483,
489-90
(S.D.N.Y. 1998) (nicknames not prejudicial and inflammatory and need not be stricken).
Defendant’s conclusory argument that
allegations regarding defendant’s receipt of $3.1 million during the scheme are prejudicial and inflammatory is not persuasive. Defendant does not move to strike references to the $1.5 million that he received after June 30, 2003, and he does not explain why $1.5 million is not prejudicial and inflammatory, but $3.1 million is.
As to the SEC rule, this Court’s instructions can be expected
to clear up any possible confusion.
Finally, defendant has failed
to show how the terms “dishonest services” and “sham” invoice are anything more than permissible descriptions of his conduct or how their use is in any way prejudicial and inflammatory.
His motion
to strike portions of the Indictment as surplusage should be denied.
-58-
G.
A Bill of Particulars is Not Required Because the Indictment is Detailed and the Discovery Includes “Documents of Particular Relevance.” Despite the detailed allegations in the Indictment and the
extensive discovery which has been provided, defendant, through 38 questions,27 seeks particulars regarding various allegations.
For
example, defendant contends that the Indictment fails “to identify any of the ‘persons’ who Mr. Bruno allegedly contacted,” and “to specify what those interests were and when they were placed before the Legislature and New York State agencies.” Support
of
Motion
Memorandum”) at 4. perceived
ability,”
for
a
Bill
of
Particulars
Memorandum in (“Particulars
He also asserts that the phrases “reasonably “dishonest
services,”
and
“discretionary
official action” require explanation. Id. at 4. Defendant has not established that a bill of particulars is necessary to prepare his defense, and his motion should therefore be denied. “The function of a bill of particulars is to provide defendant with information about the details of the charge against him if
27
Defendant’s questions resemble interrogatories in a civil case, and this Court should “not order the Government to ‘answer a set of detailed interrogatories in the guise of a bill of particulars.’” United States v. Grasso, 173 F.Supp. 2d 353, 366 (E.D. Pa. 2001) (quoting United States v. Kenny, 462 F.2d 1205, 1212 (3d Cir. 1972)); see also United States v. Gross, 2007 WL 1556638, at *1 (E.D. Mich. 2007) (“This Court may, in its sound discretion, ‘decline[ ] to require the Government to answer a set of detailed interrogatories in the guise of a bill of particulars’ especially if opportunity for liberal discovery exists.”) (quoting Kenny). -59-
this is necessary to the preparation of his defense and to avoid prejudicial surprise at trial,” and one “should be required only where the charges of the indictment are so general that they do not advise the defendant of the specific acts of which he is accused.” United States v. Torres, 901 F.2d 205, 234 (2d Cir. 1990) (citation and quotation marks omitted).
The test “is not whether the
information would be useful to the defense, but rather whether it is necessary.” United States v. Chalmers, 410 F. Supp. 2d 278, 286 (S.D.N.Y. 2006).
“Generally, if the information sought by the
defendant is provided in the indictment or in some acceptable alternate form, no bill of particulars is required.” United States v. Bortnovsky, 820 F.2d 572, 574 (2d Cir. 1987); see also United States
v.
Theriault,
2007
WL
4377781,
at
*1
(N.D.N.Y.
2007)
(“extensive discovery disclosed by the government together with supplemental oral and written disclosure can obviate the need for a bill of particulars”) (citation omitted).
“Acquisition of
evidentiary detail is not a function of a bill of particulars,” Torres, 901 F.2d at 234. Here,
the
detailed
allegations
in
the
Indictment
advise
defendant of the specific acts with which he is charged.
In
addition to the detailed allegations in the Indictment, e.g. Indictment ¶ 22, the discovery provided by the government provides defendant
with
even
more
detail
regarding
the
allegations.
Although the government has provided defendant with virtually all
-60-
documents which it obtained during the course of the investigation (including, where available, in electronic format), the government has not “simply unload[ed] a pile of documents on [defendant] with the expectation that he will somehow be able to decipher what the government will attempt to prove at trial,” Particulars Memorandum at 5, because the government has also provided defendant with “documents of particular relevance.”
The “documents of particular
relevance,”
on
which
were
produced
February
6,
2009
and
supplemented on April 29, 2009 in chronological order with certain financial records and official acts documents separately organized, are the documents the government views as most relevant, and from which the government anticipates that its trial exhibits will be selected.
The government will continue to add documents to the
category of “documents of particular relevance” if others are identified. Examples particular
of
information
relevance”
contained
include:
(1)
in
names
the of
“documents
union
of
officials
defendant solicited in letters, memoranda, and messages from the Wright
employee
who
worked
directly
with
defendant
and
who
identified labor union officials for defendant to contact; (2) interests
pursued
before
agencies
by
persons
the
the
Legislature
and
entities
and
New
defendant
York
State
solicited
identified in memoranda prepared by Senate staffers and lobbyists; and (3) official actions taken by defendant reflected in Senate
-61-
majority initiative forms signed by defendant directing money to particular unions or entities, spreadsheets tracking authorization and spending, and memoranda and notes setting forth or describing actions taken by defendant. Given the fact that the government has produced virtually all of the documents which it obtained during the course of this investigation and has also provided defendant with “documents of particular relevance,” which it will supplement with any additional anticipated trial exhibits as it prepares for trial, and the government has filed its jury instructions, a bill of particulars is unnecessary.
See Chalmers, 410 F. Supp. 2d at 285 (“defendants
have or will have sufficient information to defend against these charges” where “the government stated that it planned to provide the defendants with a subset of documents, culled out from the voluminous records, that it believes support the charges and may be used in its case-in-chief” ); see also Ferguson, 478 F. Supp. 2d at 226-27 (rejecting bill of particulars motion where government identified “hot documents” it intended to use in its case-in-chief and also produced electronically searchable databases).28
28
Although defendant has asked for explanations of the term “dishonest services” and other phrases used in the indictment, their meanings are clear from the case law, and a bill of particulars defining those terms is unnecessary. -62-
III.
Conclusion
For the above reasons, defendant’s motions should be denied. Dated: May 22, 2009
Respectfully submitted, ANDREW T. BAXTER United States Attorney
By: /s/ Elizabeth C. Coombe Elizabeth C. Coombe William C. Pericak Assistant U.S. Attorneys
-63-
UNITED STATES OF AMERICA
Criminal Action No.
09-CR-29
v. JOSEPH L. BRUNO,
Speedy Trial Act Exclusion Pursuant to 18 U.S.C. § 3161(h)(1)(F) & (J) Through 30 Days After Conclusion of Hearing on Pretrial Motions (Hon. Gary L. Sharpe)
Defendant.
Government’s Omnibus Memorandum of Law in Opposition to Defendant’s Three Motions to Dismiss The Indictment, Two Motions to Strike Portions of the Indictment, and A Motion For a Bill of Particulars.
Table of Contents Introduction and Summary. . . . . . . . . . . . . . . . . . . . 1 I.
II.
Honest Services Mail and Wire Fraud Encompasses Failure To Disclose A Material Conflict of Interest Or Other Material Information.. . . . . . . . . . . . . . . . . . . 2 A.
Pre-McNally Case Law Prohibited, Under The Mail Fraud Statute, Failure To Disclose Material Conflicts of Interest Or Other Material Information.. . . . . . 4
B.
McNally v. United States. . . . . . . . . . . . . . . 8
C.
The Enactment of 18 U.S.C. § 1346.. . . . . . . . . . 9
D.
Following McNally, Failure to Disclose a Material Conflict of Interest Or Other Material Information Remains One of the Two “Core Categories” of Honest Services Fraud. . . . .
11
Argument A.
B.
The Honest Services Statute is Not Unconstitutionally Vague as Applied to This Case Because Ordinary People Can Understand That Failure to Disclose Material Conflicts of Interest or Related Material Information is Prohibited... . . .
16
The Allegations of the Indictment are Relevant and Sufficient to Charge Defendant With Honest Services Mail and Wire Fraud... . . . . . . . . . .
24
1.
Acts Which Occurred Before June 30, 2003 are Relevant to the Honest Services Fraud Scheme and May Not Be Stricken Simply Because They Are Outside the Statute of Limitations. . .24
2.
Evidence Regarding Non-Compliance With State Law Is Relevant And Admissible To Defendant's Intent and Motive, and To Assist the Jury In Understanding the Actions of Participants, But Allegations of State Law in an Indictment Do Not Transform Violation of State Law Into An “Element” of Honest Services Fraud.. .
3.
32
Accepting the Allegations in the Indictment As True, as Required When Assessing the Sufficiency of an Indictment, This Indictment Charges a Valid Offense. . . . . . . . . . . . . . . . . .35
C.
The Honest Services Fraud Statute is a Clear Exercise of Congress’s Power and Does Not Violate Any Federalism Principles.. . . . . . . . . .40
D.
The Model Grand Jury Charge is Not Unconstitutional. . . . . . . . . . . . . . . . . . .43
E.
The Forfeiture Allegation Should Not be Stricken. . . . . . . . . . . . . . . . . . . . . .
50
None of the Language in the Indictment is Surplusage. . . . . . . . . . . . . . . . . . . . .
53
F.
1.
2.
3.
G.
Allegations Regarding SEC Rule 206-(4)-3 are Relevant Evidence Regarding Defendant's Intent and Motive and As Background. . . . . .
53
The Phrases “Dishonest Services” and “Sham Invoice” are Accurate Descriptions of Relevant Evidence.. . . . . . . . . . . . .
56
Defendant’s Motion To Strike Surplusage Should Be Denied For the Independent Reason That He Has Failed To Show That the Allegations Are Inflammatory and Prejudicial.. . . . . . . 58
A Bill of Particulars is Not Required Because the Indictment is Detailed and the Discovery Includes “Documents of Particular Relevance”... . .
59
III. Conclusion.. . . . . . . . . . . . . . . . . . . . . . .
63
-ii-
Table of Authorities FEDERAL CASES Article II Gun Shop, Inc. v. Gonzales, 441 F.3d 492 (7th Cir. 2006). . . . . . . . . . . . . . . . .
26
Badders v. United States, 240 U.S. 391 (1916).. . . . . . . . . . . . . . . . . . . . .
40
Ballard v. United States, 329 U.S. 187 (1946).. . . . . . . . . . . . . . . . . . . . .
50
Bank of Nova Scotia v. United States, 487 U.S. 250 (1988).. . . . . . . . . . . . . . . . . . . . .
50
City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991).. . . . . . . . . . . . . . . . . . . . .
39
Hayes Int’l. Corp. v. McLucas, 509 F.2d 247 (5th Cir. 1975). . . . . . . . . . . . . . . . . . 5 Hamling v. United States, 418 U.S. 87, 117 (1974).. . . . . . . . . . . . . . . . . . .
36
Hill v. Colorado, 530 U.S. 703 (2000).. . . . . . . . . . . . . . . . . . . . .
17
Kolender v. Lawson, 461 U.S. 352 (1983))... . . . . . . . . . . . . . . . . . . .
17
McNally v. United States, 483 U.S. 350 (1987).. . . . . . . . . . . . . . . . . 4, 8, 9, 42 Muntaqim v. Coombe, 366 F.3d 102 (2d Cir. 2004).. . . . . . . . . . . . . . . . .
18
SEC v. Capital Gains Research Bureau, 375 U.S. 180 (1963).. . . . . . . . . . . . . . . . . . . . . . 7 Shannon v. United States, 512 U.S. 573 (1994).. . . . . . . .
48
Sir Speedy, Inc. v. L & P Graphics, Inc., 957 F.2d 1033 (2d Cir. 1992). . . . . . . . . . . . . . . . .
26
United States v. Adams, 343 F.3d 1024 (9th Cir. 2003).. . . . . . . . . . . . . . . .
45
-iii-
United States v. Alfonso, 143 F.3d 772 (2d Cir. 1998).. . . . . . . . . . . . . . .
36, 37
United States v. Alter, 482 F.2d 1016 (9th Cir. 1973).. . . . . . . . . . . . . . . .
44
United States v. Altman, 48 F.3d 96 (2d Cir.1995). . . . . . . . . . . . . . . . . . .
21
United States v. Antico, 275 F.3d 245 (3d Cir. 2001).. . . . . . . . . . . . .
11, 14, 23
United States v. Ashdown, 509 F.2d at 798 (5th Cir. 1975).. . . . . . . . . . . . .
26, 27
United States v. Bicoastal Corp., 819 F. Supp. 156 (N.D.N.Y. 1993). . . . . . . . . . . . . . .
37
United States v. Bohonus, 628 F.2d 1167 (9th Cir. 1980).. . . . . . . . . . . . . . . .
19
United States v. Bortnovsky, 820 F.2d 572 (2d Cir. 1987).. . . . . . . . . . . . . . . . .
60
United States v. Brechtel, 997 F.2d 1108 (5th Cir. 1993).. . . . . . . . . . . . . .
33, 34
United States v. Brown, 555 F.2d 336, 339-40 (2d Cir. 1977).. . . . . . . . . . . . .
21
United States v. Bronston, 658 F.2d 920 (2d Cir. 1981).. . . . . . . . . . . . . . . . 6, 15 United States v. Brumley, 116 F.3d 728 (5th Cir. 1997). . . . . . . . . . .
12, 13, 32, 56
United States v. Bryan, 58 F.3d 933 (4th Cir. 1995). . . . . . . . . . . . . . . . . United States v. Bush, 522 F.2d 641 (7th Cir. 1975). . . . . . . . . . . .
32
4, 5, 14, 15
United States v. Castro, 89 F.3d 1443 (11th Cir. 1996).. . . . . . . . . . . . . . . .
41
United States v. Cedano-Arellano, 332 F.3d 568 (9th Cir. 2003). . . . . . . . . . . . . . . . .
45
-iv-
United States v. Cerone, 830 F.2d 938 (8th Cir. 1987). . . . . . . . . . . . . . . . .
36
United States v. Ciambrone, 601 F.2d 616, 629 (2d Cir. 1979). . . . . . . . . . . . . . .
47
United States v. Chalmers, 410 F. Supp. 2d 278 (S.D.N.Y. 2006).. . . . . . . . . . .
60, 62
United States v. Cisneros, 203 F.3d 333 (5th Cir. 2000). . . . . . . . . . . . . . .
26, 27
United States v. Coonan, 938 F.2d 1553 (2d Cir.1991).. . . . . . . . . . . . . . . . .
17
United States v. Curry, 681 F.2d 406 (5th Cir. 1982). . . . . . . . . . . . . . . . .
10
United States v. DeFiore, 720 F.2d 757 (2d Cir. 1983).. . . . . . . . . . . . . . . . .
26
United States v. Derosier, 501 F.3d 888 (8th Cir. 2007). . . . . . . . . . . . . . . . .
23
United States v. Dial, 757 F.2d 163 (7th Cir. 1985). . . . . . . . . . . . . . . . . . 6 United States v. Dula, 989 F.2d 772 (5th Cir. 1993). . . . . . . . . . . . . . . . .
27
United States v. Eisen, 974 F.2d 246 (2d Cir. 1992).. . . . . . . . . . . . . . . . .
31
United States v. Elliott, 363 F. Supp. 2d 439 (N.D.N.Y. 2005).. . . . . . . . . . . . .
38
United States v. Ferguson, 478 F. Supp. 2d 220 (D. Conn. 2007).. . . . . . . . . . .
57, 62
United States v. Geddings, 278 Fed. Appx. 281 (4th Cir. 2008), cert. denied, 129 S. Ct. 435 (2008).. . . . . . . . . . . . . . . . . .
18, 19
United States v. Geddings, 2006 WL 4877548 (E.D.N.C. 2006), aff'd Geddings, 278 Fed. Appx. 281 (4th Cir. 2008), cert. denied, 129 S. Ct. 435 (2008).. . . . . . . . . . .
18, 19
-v-
United States v. Giampa, 904 F. Supp. 235 (D.N.J. 1995). . . . . . . . . . . . . . . .
28
United States v. Grammatikos, 633 F.2d 1013 (2d Cir. 1980). . . . . . . . . . . . . . . . .
51
United States v. Grandmaison, 77 F.3d 555 (1st Cir. 1996).. . . . . . . . . . . . . . . . .
12
United States v. Grasso, 173 F. Supp. 2d 353 (E.D. Pa. 2001).. . . . . . . . . . . . .
58
United States v. Gross, 2007 WL 1556638 (E.D. Mich. 2007).. . . . . . . . . . . . . .
59
United States v. Hasner, 340 F.3d 1261 (11th Cir. 2003). . . . . . . . . . . . . . . .
32
United States v. Hatcher, 323 F.3d 666 (8th Cir. 2003). . . . . . . . . . . . . . .
52, 53
United States v. Heacock, 31 F.3d 249 (5th Cir. 1994).. . . . . . . . . . . . . . . . .
31
United States v. Heatley, 994 F. Supp. 483 (S.D.N.Y. 1998). . . . . . . . . . . . . . .
58
United States v. Holzer, 816 F.2d 304 (7th Cir. 1987),vacated and remanded for reconsideration in light of McNally v. United States, 484 U.S. 807 (1987).. . . . . . . . . . . . . . . 4, 6, 7, 13, 15 United States v. Hooks, 2005 WL 3370549 (W.D. Tenn. 2005).. . . . . . . . . . . . . .
46
United States v. Ingredient Tech. Corp., 698 F.2d 88, 96 (2d Cir. 1983). . . . . . . . . . . . . . . .
21
United States v. Jennings, 487 F.3d 564 (8th Cir. 2007). . . . . . . . . . .
32, 33, 39, 52
United States v. Josephberg, 418 F. Supp. 2d 297 (S.D.N.Y. 2005).. . . . . . . . . . . . . United States v. Keane, 522 F.2d 534 (7th Cir. 1975). . . . . . . . . . . . . . .
-vi-
21
14, 33
United States v. Kemp, 500 F.3d 257 (3d Cir. 2007), cert. denied, 128 S. Ct. 329 (2008).. . . . . . . . . . 3, 14, 16 United States v. Kenny, 462 F.2d 1205 (3d Cir. 1972). . . . . . . . . . . . . . . United States v Kincaid-Chauncey, 556 F.3d 923 (9th Cir. 2009). . . . . . . .
58, 59
2, 3, 15, 19, 23, 39
United States v. Klein, 476 F.3d 111, 113 (2d Cir.), cert. denied, 128 S. Ct. 804 (2007).. . . . . . . . . . . . . United States v. Knight, 490 F.3d 1268 (11th Cir. 2007), cert. denied, 128 S. Ct. 547 (2007).. . . . . . . . . . .
36
45, 46
United States v. Lazore, 90 F. Supp. 2d 202 (N.D.N.Y. 2000). . . . . . . . . . . . . .
36
United States v. Mandel, 591 F.2d 1347 (4th Cir. 1979) aff’d in relevant part, 602 F.2d 653 (1979) (en banc).. . . 5, 10 United States v. Marcucci, 299 F.3d 1156 (9th Cir. 2002).. . . . . . . . . . . . . .
45, 48
United States v. Margiotta, 688 F.2d 108(2d Cir. 1981) .. . . 4,5, 10, 13, 14, 21, 22, 32, 41 United States v. Martin, 195 F.3d 961 (7th Cir. 1999). . . . . . . . . . . . . . . . .
32
United States v. McDonough, 56 F.3d 381 (2d Cir. 1995). . . . . . . . . . . . . . . 3, 13, 15 United States v. McElroy, 910 F.2d 1016 (2d Cir. 1990). . . . . . . . . . . . . . . . .
33
United States v. McIntosh, 23 F.3d 1454 (8th Cir. 1994). . . . . . . . . . . . . . . . .
28
United States v. Middlemiss, 217 F.3d 112 (2d Cir. 2000).. . . . . . . . . . . . . . .
14, 23
United States v. Moody, 923 F.2d 341 (5th Cir. 1991). . . . . . . . . . . . . . . . . -vii-
37
United States v. Mulder, 273 F.3d 91 (2d Cir. 2001). . . . . . . . . . . . . . . . . .
25
United States v. Musacchio, 968 F.2d 782 (9th Cir. 1991). . . . . . . . . . . . . . . . .
37
United States v. Muskovsky, 863 F.2d 1319 (7th Cir. 1988).. . . . . . . . . . . . . . . .
37
United States v. Nadi, 996 F.2d 548 (2d Cir. 1993).. . . . . . . . . . . . . . . . .
17
United States v. Nappy, 1995 WL 702363 (S.D.N.Y. 1995). . . . . . . . . . . . . . . .
54
United States v. Narvarro-Vargas, 408 F.3d 1184 (9th Cir. 2005).. . . . . . . . . . . .
45, 48, 49
United States v. Nat’l Dairy Products Corp., 372 U.S. 29 (1963). . . . . . . . . . . . . . . . . . . . . .
17
United States v. Orenuga, 430 F.3d 1158 (D.C.Cir. 2005).. . . . . . . . . . . . . . . .
39
United States v. Ozbay, 2007 WL 656049 (N.D.N.Y. 2007). . . . . . . . . . . . . . . .
55
United States v. Panarella, 277 F.3d 678 (3d Cir. 2002).. . . . . . 8, 13, 15, 16, 23, 32, 39 United States v. Paradies, 98 F.3d 1266 (11th Cir. 1996).. . . . . . . . . . . . . . . .
12
United States v. Parker, 364 F.3d 934 (8th Cir. 2004). . . . . . . . . . . . . . . . .
54
United States v. Parks, 68 F.3d 860 (5th Cir. 1995).. . . . . . . . . . . . . . . . .
54
United States v. Parrett, 530 F.3d 422 (6th Cir. 2008). . . . . . . . . . . . . . . . .
53
United States v. Peters, 2009 WL 763384 (W.D.N.Y. 2009). . . . . . . . . . . . . . . .
51
United States v. Pharis, 298 F.3d 228 (3d Cir. 2002).. . . . . . . . . . . . . . . . .
30
-viii-
United States v. Proffitt, 2008 WL 2225734 (W.D. Mo. 2008).. . . . . . . . . . . . . . .
56
United States v. Porcelli, 865 F.2d 1352 (2d Cir. 1989). . . . . . . . . . . . . . . . .
35
United States v. Read, 658 F.2d 1225 (7th Cir. 1981).. . . . . . . . . . . . . . . .
27
United States v. Rezko, 2007 WL 2904014 (N.D. Ill. 2007). . . . . . . . . . . . . . .
38
United States v. Rigas, 281 F. Supp. 2d 660 (S.D.N.Y. 2003).. . . . . . . . . . . . .
51
United States v. Rosenthal, 9 F.3d 1016 (2d Cir. 1993). . . . . . . . . . . . . . . . 28, 34 United States v. Royer, 549 F.3d 886 (2d Cir. 2008), petition for cert. filed, (U.S. May 12, 2009) (No. 08-10357). . . . . . . . . . . . . . 56 United States v. Rybicki, 354 F.3d 124 (2d Cir. 2003).. . . . 11, 12, 17, 18, 20-22, 42, 43 United States v. Sawyer, 85 F.3d 713 (1st Cir. 1996).. . . . . . . . . . . . . . .
23, 41
United States v. Sawyer, 239 F.3d 31 (1st Cir. 2001).. . . . . . . . . . . . . . .
23, 32
United States v. Scarpa, 913 F.2d 993 (2d Cir. 1990).. . . . . . . . . . . . . . . . .
26
United States v. Sciandra, 529 F. Supp. 320 (S.D.N.Y. 1982). . . . . . . . . . . . . . .
57
United States v. Scop, 846 F.2d 135 (2d Cir. 1988).. . . . . . . . . . . . . . . . .
31
United States v. Sharifipour, 2006 WL 1007661 (N.D.N.Y. 2006).. . . . . . . . . . . . .
25, 26
United States v. Siembida, 2008 WL 4703015 (S.D.N.Y. 2008).. . . . . . . . . . . . . . .
41
United States v. Silvano, 812 F.2d 754 (1st Cir. 1987). . . . . . . . . . . . . . . . .
41
-ix-
United States v. Skowronski, 968 F.2d 242 (2d Cir. 1992).. . . . . . . . . . . . . . . . .
27
United States v. Stein, 429 F. Supp. 2d 633 (S.D.N.Y. 2006).. . . . . . . . . . . . .
58
United States v. Tannenbaum, 934 F.2d 8 (2d Cir. 1991).. . . . . . . . . . . . . . . .
22, 55
United States v. Theriault, 2007 WL 4377781 (N.D.N.Y. 2007).. . . . . . . . . . . . . . .
60
United States v. Thomas, 116 F.3d 606 (2d Cir. 1997).. . . . . . . . . . . . . . .
46, 47
United States v. Tomero, 496 F. Supp. 2d 253 (S.D.N.Y. 2007).. . . . . . . . . . .
25, 26
United States v. Torres, 901 F.2d 205 (2d Cir. 1990).. . . . . . . . . . . . . . . . .
60
United States v. Vampire Nation, 451 F.3d 189 (3d Cir. 2006).. . . . . . . . . . . . . . . . .
52
United States v. Viertel, 2002 WL 1560805 (S.D.N.Y. 2002).. . . . . . . . . . . . . . .
20
United States v. Von Barta, 635 F.2d 999 (2d Cir. 1980).. . . . . . . . . . . . . . 6, 10, 38 United States v. Wallach, 935 F.2d 445 (2d Cir. 1991).. . . . . . . . . . . . . . . . .
39
United States v. Warner, 498 F.3d 666 (7th Cir. 2007), cert. denied, 128 S. Ct. 1329 (2008). . . . . . . . . . . . .
23
United States v. Washington, 705 F.2d 489 (D.C. Cir. 1983).. . . . . . . . . . . . . . . .
47
United States v. White, 2004 WL 2612017 (E.D.Pa. 2004), aff’d after trial, Kemp, 500 F.3d 257 (3d Cir. 2007). . . . .
14
United States v. Weiss, 491 F.2d 460 (2d Cir. 1974). . . . . . . . . . . . . . . . .
37
-x-
United States v Weyhrauch, 548 F.3d 1237 (9th Cir. 2008),cert. denied, 77 U.S.L.W. 3562 (2009).. . 2, 12, 13, 14, 19, 32, 35, 40, 41, 43 United States v. Woodward, 149 F.3d 46 (1st Cir. 1998).. . . . . . . . . . 3, 13, 15, 23, 39 United States v. Wright, 1990 WL 78035 (N.D. Ill. 1990). . . . . . . . . . . . . . . .
30
United States v. Yashir, 166 F.3d 873 (7th Cir. 1999). . . . . . . . . . . . . . . . .
38
United States v. Yeaman, 987 F. Supp. 373 (E.D. Pa. 1997). . . . . . . . . . . . . . .
27
United States v. Zedner, 555 F.3d 68 (2d Cir. 2008), petition for cert. filed, (U.S. Apr. 28, 2009) (No. 08-10089).. . . . . . . . . . . . .
18
Vasquez v. Hillery, 474 U.S. 254 (1986).. . . . . . . . . . . . . . . . .
47, 48, 50
Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489. . . . . . . . . . . . . . . . . . . . . . . . . 17 FEDERAL STATUTES, RULES, AND OTHER AUTHORITIES U.S. Const. Art. IV, § 4. . . . . . . . . . . . . . . . . . . 18 U.S.C. §§ 1341, 1343, 1346.. . . . . . . . . . . . . .
41
passim
Pub. L. No. 100-690, Title VII, § 7603(a), 102 Stat. 4508 (Nov. 18, 1988).. . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 11 Fed. R. Crim. P. 32.2(b)(1).. . . . . . . . . . . . . . . . . 134 Cong. Rec. H11108-01, 1988 WL 182261 (Oct. 21, 1988).
52
10, 41
134 Cong. Rec. S17360-02, 1988 WL 182529 (Nov. 10, 1988). . .
11
Hearing on H.R. 3089 and H.R. 3050, Fraud Amendment Acts of 1987, Serial 145, H521-87 (May 12, 1988). . . . . . . . . . . . . . 10 S.E.C. Rule 206-(4)-3, 17 C.F.R. §275.206 (4)-3(a)(2).. . . 34,53
-xi-
Association of the Bar of the City of New York, Conflict of Interest and Federal Service 3 (1960) . . . . . . . . . 5, 7, 18 Committee on Standards of Official Conduct, 102d Cong., 2d Sess., Ethics Manual for Members, Officers, and Employees of the United States House of Representatives, Ch. 3 at 3 (1992). . . . . . . 5 1A Kevin F. O’Malley et al., Federal Jury Practice & Instructions § 27.11(“Official Act” Was Lawful - No Defense) (6th ed. 2008).39
-xii-
Introduction and Summary This
Memorandum
is
submitted
as
an
omnibus
response
in
opposition to six motions filed by defendant: three motions to dismiss the Indictment; two motions to strike portions of the Indictment; and a motion to obtain a bill of particulars.
The
Indictment charges defendant, in eight counts, with honest services mail and wire fraud, in violation of 18 U.S.C. §§ 1341, 1343, 1346. The charges are based on more than $3 million in payments to defendant, a public official, from private persons and entities; his failure to disclose material conflicts of interest and material information
in
connection
with
those
payments,
including
his
failure to perform legitimate work for those payments; and related official actions defendant took benefitting private interests. The Indictment alleges that defendant, a State Senator and Senate Majority Leader, “(a) contact[ed] for personal compensation and enrichment, and (b) enter[ed] and attempt[ed] to enter into direct and indirect financial relationships with, persons or entities who were pursuing interests before the Legislature or State agencies,” “conceal[ed], disguis[ed], and fail[ed] to disclose the existence and
nature
of
such
compensated
contacts
and
financial
relationships, and the resulting conflicts of interest,” Indictment ¶ 18, “knowing and believing that his reasonably perceived ability to influence official action would, at least in part, motivate those he contacted to enter into financial relationships beneficial to his personal financial interests, id. at ¶ 19, “did not perform
legitimate work commensurate with the payments,” e.g. id. at ¶ 44, and took “discretionary official action on legislative, funding, contract, and regulatory issues benefitting” the individuals and entities behind those financial interests. Indictment’s
sixty-six
paragraphs
Id. at ¶¶ 34, 59.
detail
the
nature
of
The the
financial relationships and contacts, and resulting conflicts of interest, as well as efforts to conceal, disguise, and fail to disclose pertinent information. Defendant contends the Indictment should be dismissed because (a) § 1346 is unconstitutionally vague, (b) it fails to charge a crime, (c) it violates federalism principles, and (d) the court’s pre-charge to the grand jury was unconstitutional. seeks
to
surplusage,
(e) and
strike
the
(g)
obtain
forfeiture a
bill
of
Defendant also
allegation, particulars.
(f)
strike None
of
defendant’s motions have any merit, and they should all be denied. I.
Honest Services Mail and Wire Fraud Encompasses Failure to Disclose A Material Conflict of Interest or Other Material Information. “The courts have recognized two principal theories of honest
services fraud in cases involving public officials: [1] fraud based on a public official’s acceptance of a bribe and [2] fraud based on a public official’s failure to disclose a material conflict of interest.”
United States v Kincaid-Chauncey, 556 F.3d 923, 942
(9th Cir. 2009) (emphasis added); see United States v Weyhrauch, 548 F.3d 1237, 1247 (9th Cir. 2008) (pre-McNally cases “recognized -2-
two core categories of conduct by public officials . . . sufficient to support an honest services conviction: (1) taking a bribe or otherwise
being
paid
for
a
decision
while
purporting
to
be
exercising independent discretion and (2) nondisclosure of material information”) (emphasis added), cert. denied, 77 U.S.L.W. 3562 (2009); United States v. Kemp, 500 F.3d 257, 279 (3d Cir. 2007) (same), cert. denied, 128 S. Ct. 1329 (2008); United States v. Woodward, 149 F.3d 46, 57 (1st Cir. 1998) (same). The Indictment here charges the second of the two “core categories” of honest services fraud: failure to disclose material conflicts of interest and related material information.1
See
United States v. McDonough, 56 F.3d 381, 391 (2d Cir. 1995) (“Without
disclosing
his
conflict
of
interest”
defendant
“participated in government decisions on insurance matters” and “defrauded Rensselaer County citizens and officials by means of nondisclosure and concealment of information about the kickback scheme that he had a duty to disclose”). Although defendant claims
1
Apparently for tactical reasons, defendant never squarely addresses conflict of interest honest services case law. This omission is puzzling because, in addition to the plain language of the Indictment alleging that defendant failed to disclose conflicts of interest and related information, Indictment ¶ 18, the United States Attorney made clear this basis for prosecution, most recently in a March 2, 2009 letter to Mr. Lowell (Attachment A). Given the fact that the government brought United States v. Kincaid-Chauncey, 556 F.3d 923 (9th Cir. 2009) to defendant’s attention months ago, he should not be allowed to use a reply brief to raise arguments he could, and should, have made on May 1, 2009 when the government would have had a fair opportunity to respond. -3-
that
he
had
no
notice
that
his
conduct
was
prohibited,
the
enactment of § 1346 (in response to McNally v. United States, 483 U.S. 350 (1987)), and § 1346’s application to public officials who fail to disclose material conflicts of interest and other material information is the result of the unremarkable application of wellsettled legal principles to public officials in their capacities as fiduciaries. A.
Pre-McNally Case Law Prohibited, Under the Mail Fraud Statute, Failure to Disclose Material Conflicts of Interest or Other Material Information.
Prior to the passage of § 1346 in 1988, the lower federal courts had ruled that (1) a public official owes a fiduciary duty to the citizenry, see, e.g., United States v. Margiotta, 688 F.2d 108, 124 (2d Cir. 1982) (“[I]ndividuals who in reality or effect are the government owe a fiduciary duty to the citizenry”), United States v. Holzer, 816 F.2d 304, 307 (7th Cir. 1987) (“A public official is a fiduciary toward the public”), vacated and remanded for reconsideration in light of McNally v. United States, 484 U.S. 807 (1987), (2) a public official has an affirmative duty to disclose material information and give notice of conflicts of interest, see Margiotta, 688 F.2d at 128 (“affirmative” “duty to disclose material information or give notice of his conflict of interest” due to defendant “having undertaken basic functions of government”); United States v. Bush, 522 F.2d 641, 651-52 & n. 11 (7th Cir. 1975) (public official, by virtue of his office, had duty
-4-
“to disclose and not conceal facts known to him which he had reason to believe were material”), and (3) the term “scheme to defraud” as used in the mail fraud statute, includes a scheme in which a public official would breach his duty of disclosure. 652 n. 12.
Bush, 522 F.2d at
Such schemes were actionable, even though they did not
involve the deprivation of money or property, because they deprived citizens of the intangible right to honest services of the public official.
Margiotta,
688
F.2d
at
121
(“honest
and
faithful
participation in governmental affairs”); United States v. Mandel, 591
F.2d
1347,
1362
(4th
Cir.
1979)
(“honest,
faithful
and
disinterested services”), aff’d in relevant part, 602 F.2d 653 (1979) (en banc); Bush, 522 F.2d at 646 (“loyal and faithful services”). These holdings, applying the mail fraud statute to a public official’s failure to disclose material conflicts of interest2 or
2
The phrase “conflict of interest” refers to “two interests: one is the interest of the government official (and of the public) in the proper administration of his office; the other is the official’s interest in his private economic affairs. A conflict of interest exists whenever these two interests clash, or appear to clash.” Association of the Bar of the City of New York, Conflict of Interest and Federal Service 3 (1960) (“ABCNY Conflict of Interest Report”); Hayes Int’l. Corp. v. McLucas, 509 F.2d 247, 260 (5th Cir. 1975) (citing ABCNY Conflict of Interest Report); Black’s Law Dictionary 299 (6th ed. 1990) (defining conflict of interest as “refer[ing] to a clash between public interest and the private pecuniary interest of the [public official] concerned”); see also Committee on Standards of Official Conduct, 102d Cong., 2d Sess., Ethics Manual for Members, Officers, and Employees of the United States House of Representatives, Ch. 3 at 3 (1992), available at www.house.gov/Ethics/Ethicforward.html (term “conflict of interest” “denotes a situation in which an official’s conduct of his office -5-
other
material
information,
were
based
on
the
well-settled
principle that fraud includes a fiduciary’s concealment of such information: Fraud in the common law sense of deceit is committed by deliberately misleading another by words, by acts, or, in some instances-notably where there is a fiduciary relationship, which creates a duty to disclose all material facts-by silence. See Prosser and Keeton on the Law of Torts §§ 105-06 (5th ed. 1984). United States v. Dial, 757 F.2d 163, 168 (7th Cir. 1985). As Judge Posner explained in the context of a case involving a public official: Fraud in its elementary common law sense of deceit – and this is one of the meanings that fraud bears in the [mail fraud] statute, see United States v. Dial, 757 F.2d 163, 168 (7th Cir.1985) – includes the deliberate concealment of material information in a setting of fiduciary obligation. A public official is a fiduciary toward the public, including, in the case of a judge, the litigants who appear before him, and if he deliberately conceals material information from them he is guilty of fraud. When a judge is busily soliciting loans from counsel to one party, and not telling the opposing counsel (let alone the public), he is concealing material information in violation of his fiduciary obligations. Holzer, 816 F.2d at 307.3
conflicts “risk of whenever (internal
with his private economic affairs;” “ultimate concern” is impairment of impartial judgment, a risk which arises there is temptation to serve personal interests”) citations and footnotes omitted).
3
In the employer-employee context, the Second Circuit reversed a district court’s dismissal of an indictment where an employee breached his fiduciary duty, and there was a “violation of the employee’s duty to disclose material information to his employer.” United States v. Von Barta, 635 F.2d 999, 1005-07 (2d Cir. 1980); see also United States v. Bronston, 658 F.2d 920, 927-28 (2d Cir. 1981) (lawyer, in disregard of fiduciary duty to firm’s client, -6-
Regulation of conflicts of interest is important because it is “in essence derived, or secondary – one remove away from the ultimate misconduct feared.
The bribe is forbidden because it
subverts the official’s judgment; the gift is forbidden because it may have this effect, and because it looks to others as though it does have this effect.”
ABCNY Conflict of Interest Report at 19-
20; cf. SEC v. Capital Gains Research Bureau, 375 U.S. 180, 196 (1963) (disclosure of conflict of interest required where private motivations of adviser overlap with interests of investor, so investor can evaluate “whether an adviser is serving ‘two masters’ or only one, ‘especially . . . if one of the masters happens to be economic self-interest’”). These reasons for regulating conflicts of interest have not changed, and the Third Circuit, in a post-McNally case explained why conflicts of interest must be disclosed: Were it easy to detect and prosecute public officials for bribery, the need for public officials to disclose conflicts of interest would be greatly reduced. . . . One reason why federal and state law mandates disclosure of conflicts of interest, however, is that it is often difficult or impossible to know for sure whether a public official has acted on a conflict of interest. Cf. Holzer, 816 F.2d at 308 (“How can anyone prove how a judge would have ruled if he had not been bribed?”). The only difference between a public official who accepts a bribe and a public official who receives payments while taking discretionary action that benefits that payor, as Loeper
which was seeking to obtain franchise, concealed and failed to disclose that he was advising and promoting interests of another client in obtaining same franchise, and thus was guilty of mail fraud). -7-
[a state senator at the time] did in this case, is the existence of a quid pro quo whereby the public official and the payor agree that the discretionary action taken by the public official is in exchange for payment. Recognizing the practical difficulties in proving the existence of such a quid pro quo, disclosure laws permit the public to judge for itself whether an official has acted on a conflict of interest. United States v. Panarella, 277 F.3d 678, 697 (3d Cir. 2002). B.
McNally v. United States
In 1987, in McNally v. United States, 483 U.S. 350 (1987) the Supreme Court decided that as a matter of Congressional intent, the mail
fraud
statute
did
not
protect
the
intangible
right
of
citizens to good government, but was “limited in scope to the protection of property rights.”
Id. at 360.
In McNally, an
insurance agency which earned commissions for obtaining worker’s compensation insurance coverage for Kentucky was required, as a condition to continuing as Kentucky’s insurance agent, to share its commissions with a public official and two others through a company they jointly controlled.
Id. at 352-53.
The gist of the offense
was that the public official “did not disclose [his ownership] interest
to
persons
in
state
government
whose
actions
or
deliberations could have been affected by that disclosure.” Id. at 355.
The Court “assume[d]” that requiring the insurance agency to
share commissions did not violate state law and that “it was not illegal under state law for [the public official or the others] to own one of the agencies sharing in the commissions and hence to profit from the arrangement, whether or not they disclosed it to -8-
others in the state government.”
Id. at 361 n.9. The Court stated:
it was not alleged that the mail fraud statute would have been violated had [the public official and the other] reported to state officials the fact of their financial gain. The violation asserted is the failure to disclose their financial interest, even if state law did not require it, to other persons in the state government whose actions could have been affected by the disclosure. It was in this way that the indictment charged that the people of Kentucky had been deprived of their right to have the Commonwealth’s affairs conducted honestly. Id. (emphasis added). After reversing the convictions because the mail fraud statute was limited to the protection of property rights, and did not protect intangible rights of the citizens, the Court remarked, “If Congress desires to go further, it must speak more clearly than it has.” C.
Id. at 360. The Enactment of 18 U.S.C. § 1346
Congress spoke more clearly the following year when it enacted § 1346 as part of the Anti-Drug Abuse Act of 1988.
Pub. L. No.
100-690, Title VII, § 7603(a), 102 Stat. 4508 (Nov. 18, 1988).4 When the House added the text that became § 7603 to the Anti-Drug Abuse
Act
of
1988,
Representative
Conyers,
Chair
of
the
Subcommittee on Criminal Justice, explained that the purpose of this “worthwhile provision” was to “overturn” McNally and restore
4
18 U.S.C. § 1346 provides: “For the purposes of this chapter [63], the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.” -9-
pre-McNally case law:5 Prior to the McNally decision, every Federal appellate court that had considered the scope of the mail and wire fraud provisions held that those provisions protect the right of the public to the honest services of public officials and others responsible for the conduct of public or public affairs, see, e.g., United States v. Margiotta, 688 F.2d 108, 121-22 (2d Cir. 1981), cert. denied, 461 U.S. 913 (1983); United States v. Mandel, 591 F.2d 1347, 1358-64 (4th Cir. 1979); cert. denied, 455 U.S. 961 (1983); the right of a member of an organization to the honest services of the leaders of that organization, United States v. Curry, 681 F.2d 406, 411 (5th Cir. 1982); and the right of employers to the honest service of their employees, United States v. Von Barta, 635 F.2d 999, 1006-07 (2d Cir. 1980), cert. denied, 450 U.S. 998 (1981). This amendment restores the mail fraud provision to where that provision was before the McNally decision. The amendment also applies to the wire fraud provision, and precludes the McNally result with regard to that provision. . . This amendment is intended merely to overturn the McNally decision. No other change in the law is intended. 134 Cong Rec. H11108-01, 1988 WL 182261 (Oct. 21, 1988).6 The Senate voted to pass the bill with the House amendments on October 22, 1988, and on November 10, 1988, Senator Biden submitted
5
Although Representative Conyers ultimately did not vote in favor of the Anti-Drug Abuse Act because it included death penalty and mandatory minimum provisions, he favored the amendment to overrule McNally: “While I am going to vote against the bill, there are, as I indicated earlier, some worthwhile provisions in it.” 134 Cong Rec. H11108-01, 1988 WL 182261 (daily ed. Oct. 21, 1988) (statement of Rep. Conyers). 6
In his remarks, Representative Conyers also referenced a May 12, 1988 hearing, during which the prior case law, the effect of the McNally decision, and the policy implications of overruling it were discussed at length. Hearing on H.R. 3089 and H.R. 3050, Fraud Amendment Acts of 1987, Serial 145, H521-87 (May 12, 1988). -10-
a section-by-section analysis of the “criminal law provisions that are contained in the drug bill” for the President’s consideration which he “believe[d]” would “be helpful to those who wish to know the intent of the drafters of this legislation.”
134 Cong. Rec.
S17360-02, 1988 WL 182529 (Nov. 10, 1988). The analysis of Section 7603 explains: 7603. Intangible Rights for Mail and Wire Fraud-This section overturns the decision in McNally v. United States in which the Supreme Court held that the mail and wire fraud statutes protect property but not intangible rights. Under the amendment, those statutes will protect any person’s intangible right to the honest services of another, including the right of the public to the honest services of public officials. The intent is to reinstate all of the pre-McNally caselaw pertaining to the mail and wire fraud statutes without change. Id. (emphasis added). later.
The President signed the bill eight days
Pub. L. No. 100-690, Title VII, § 7603(a), 102 Stat. 4508
(Nov. 18, 1988). D.
Following McNally, Failure to Disclose a Material Conflict of Interest Or Other Material Information Remains One of the Two “Core Categories” of Honest Services Fraud.
Since § 1346 was enacted, every Court of Appeals to consider the issue has concluded that Congress intended for § 1346 to overrule McNally. See United States v. Rybicki, 354 F.3d 124, 134, 136 (2d Cir. 2003) (in banc) (§ 1346 designed to “overrule” McNally and “reinstated” intangible rights doctrine); United States v. Antico, 275 F.3d 245, 261 n. 16 (3d Cir. 2001) (§ 1346 “enacted to overturn McNally and restore the evolution of mail and wire fraud -11-
to its pre-McNally status”); United States v. Paradies, 98 F.3d 1266, 1283 & n. 32 (11th Cir. 1996) (§ 1346 intended to overrule McNally); United States v. Grandmaison, 77 F.3d 555, 566 (1st Cir. 1996) (same); see also Weyhrauch, 548 F.3d at 1246 (§ 1346 intended to “reinstate” pre-McNally case law).7 As for what “Congress intended when it recriminalized ‘honest services’ fraud,” the Second Circuit, in the private sector honest services fraud case Rybicki, “reviewed the principal pre-McNally decisions involving or purportedly involving ‘honest services’ fraud in the private sector.” Rybicki, 354 F.3d at 138.
Although
the Second Circuit did not consider “[t]he meaning of the phrase ‘scheme or artifice to defraud’ with respect to public corruption cases” because it was not an issue before the court, it noted that it had “been given no reason to doubt that it is susceptible to a similar mode of analysis.”
Id. at 138-39.
Applying the Rybicki approach here (reviewing pre-McNally honest services fraud decisions involving public officials), it is clear that the Indictment falls squarely within the heartland of one of the two “core categories” of public official honest services
7
Three dissenting judges in United States v. Brumley, 116 F.3d 728 (5th Cir. 1997) (en banc) did not believe that § 1346 was intended to overrule McNally, contending instead that “another” in § 1346 did not include the citizens of a state, id. at 737, and that Representative Conyers’ remarks and Senator Biden’s sectionby-section analysis to the contrary were entitled to little weight. Id. at 743 & nns. 4 & 5. Their view has not been adopted by any court. -12-
fraud cases: nondisclosure of material conflicts of interest and related material information.
See Weyhrauch, 548 F.3d at 1247
(both pre- and post-McNally public honest services fraud cases “have generally fallen into one of those two categories”). Indeed, cases decided both before and after McNally provide numerous illustrations of public officials failing to disclose financial arrangements which created conflicts of interest thereby depriving
citizens
of
the
official’s
honest
services.
See
Panarella, 277 F.3d at 681 ($330,000 paid to state senate majority leader for consulting services by tax collection business owner seeking business with local and state governments and opposing pending tax legislation); Woodward, 149 F.3d at 51-53 ($9,000 in meals, rounds of golf, and other entertainment given to state legislator and chair of insurance committee by insurance company lobbyist); Brumley, 116 F.3d at 730-31 (loans to Regional Associate Director of Texas Workers Compensation Commission from lawyers representing claimants before Commission; no claimant was awarded more money); McDonough, 56 F.3d at 384-85 (payment to county democratic chairman’s wife’s insurance agency of 50% of commissions on town and county insurance business); Holzer, 816 F.2d at 305-07 (loans to state court judge by lawyers who had cases before judge and
receivers
influenced
by
who
were
loans);
appointed Margiotta,
by 688
judge;
no
rulings
F.2d
at
113
(50%
were of
commissions on town and county insurance business to brokers
-13-
designated by Republican party town and county chairman); United States v. White, 2004 WL 2612017, at *7 (E.D.Pa. 2004) (loans to city Treasurer by entity seeking business from Treasurer “obvious” conflict of interest); aff’d after trial, Kemp, 500 F.3d 257; see also Weyhrauch, 548 F.3d at 1246 (undisclosed negotiations for future legal work to be performed by legislator for oil company while
legislator
voted
on
and
took
other
action
regarding
legislation of interest to oil company); Antico, 275 F.3d at 249, 253-54 official
(Philadelphia considered
Department applications
of and
Licenses permits
and
Inspections
submitted
by
a
business he created for his ex-wife in lieu of child support payments); United States v. Middlemiss, 217 F.3d 112, 115-16 (2d Cir. 2000) (ownership interest of port authority public affairs officer in cafeteria in port authority); Bush, 522 F.2d at 643 (ownership interest of mayor’s press secretary in advertising agency which obtained city contract for airport advertising); United States v. Keane, 522 F.2d 534, 539-44 (7th Cir. 1975) (financial interest of city councilman in properties affected by city council proceedings in which he participated). Courts, including the Second Circuit, have held that a public official has an affirmative duty to disclose material conflicts of interest or other material information. See Margiotta, 688 F.2d at 128 (“affirmative” “duty to disclose material information or give notice of his conflict of interest” due to defendant “having
-14-
undertaken basic functions of government”); see also KincaidChauncey, 556 F.3d at 945 (“A public official’s duty to disclose material information need not be expressly imposed by statute or code because a public official inherently owes a fiduciary duty to the public to make governmental decisions in the public’s best interest”) (quoting district court jury instructions); Panarella, 277 F.3d at 694 (“A public official has an affirmative duty to disclose material information to the public employer”) (quoting Woodward, 149 F.3d at 57, 62 (1st Cir. 2002)); Bush, 522 F.2d at 651-52 & n. 11 (public official, by virtue of his office, had duty “to disclose and not conceal facts known to him which he had reason to believe were material”). This duty may be breached by misrepresentation, omission, or concealment. See McDonough, 56 F.3d at 391 (in failing to disclose conflict
of
interest,
defendant
“defrauded
Rensselaer
County
citizens and officials by means of nondisclosure and concealment of information about the kickback scheme that he had a duty to disclose;”); see also Panarella, 277 F.3d at 695 (fraud includes “the deliberate concealment of material information in a setting of fiduciary obligation”) (quoting Holzer, 816 F.2d at 307); Bronston, 658
F.2d
at
928
(element
of
concealment
of
material
fact
established). When a material conflict of interest exists, a public official may
not
take
discretionary
action
-15-
directly
benefitting
the
individual or organization behind that financial interest.
Kemp,
500 F.3d at 283 (“honest services fraud encompasses a situation where a public official conceals a financial interest in violation of state criminal law while taking discretionary action that the official knows will directly benefit the individual or organization behind that financial interest”); Panarella, 277 F.3d at 694 (“a public official who conceals a financial interest in violation of state criminal law while taking discretionary action that the official knows will directly benefit that interest commits honest services fraud”). II. A.
Argument
The Honest Services Statute is Not Unconstitutionally Vague as Applied to This Case Because Ordinary People Can Understand That Failure to Disclose Material Conflicts of Interest or Related Material Information is Prohibited. Defendant claims that the honest services fraud statute is
void for vagueness because he did not have notice of “what is a crime and what is not.”
Memorandum in Support of Motion to Dismiss
the Indictment (“Dismissal Memorandum”) at 1.
His argument fails
because ordinary people can understand that failure to disclose material conflicts of interest or related material information is prohibited by Section 1346. “‘As
generally
stated,
the
void-for-vagueness
doctrine
requires that a penal statute define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage -16-
arbitrary and discriminatory enforcement.’”
Rybicki, 354 F.3d at
129 (quoting Kolender v. Lawson, 461 U.S. 352, 357 (1983)).
“‘In
the absence of first amendment considerations, vagueness challenges must be evaluated based on the particular application of the statute and not on the ground that the statute may conceivably be applied unconstitutionally to others in situations not before the Court.’” Rybicki, 354 F.3d at 129-130 (quoting United States v. Coonan, 938 F.2d 1553, 1562 (2d Cir.1991)).
In other words, the
statute must be scrutinized “in light of the specific facts of the case at hand.”
United States v. Nadi, 996 F.2d 548, 550 (2d Cir.
1993). The existence of a scienter element to the offense narrows the reach of the statute and therefore decreases the ambiguity of a criminal offense.
See Hill v. Colorado, 530 U.S. 703, 732 (2000);
Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 499 (“[A] scienter requirement may mitigate a law’s vagueness . . . .”).
Moreover, in order to protect Congress’ power
to regulate criminal activity and the courts’ power to interpret the law, a statute will not be found void merely because it is difficult to determine whether marginal offenses are covered by the statute’s language.
See United States v. Nat'l. Dairy Products
Corp., 372 U.S. 29, 32 (1963). As an initial matter, defendant seems to suggest that Section 1346 is facially vague, Dismissal Memorandum at 9-19; but see id.
-17-
at 11-12 n. 3 (stating that this Court need not reach such issue), but the Second Circuit in banc has stated that Section 1346 is not unconstitutional on its face, see Rybicki, 354 F.3d at 144 (“We conclude that the statute [§ 1346] is not unconstitutional on its face”), and this Court is bound by that holding.
See, e.g., United
States v. Zedner, 555 F.3d 68, 82 n. 3 (2d Cir. 2008) (Second Circuit panel “bound by the decisions of prior panels until such time as they are overruled by an en banc panel of our Court or by the Supreme Court”) (citations and quotations omitted); petition for cert. filed, (U.S. Apr. 28, 2009)(No. 08-10089). Section 1346 is also not void for vagueness as applied to the facts of this case.
Here, defendant failed to disclose material
conflicts of interest and related material information, and an ordinary
person
can
understand
that
(1)
it
is
wrong
for
a
fiduciary, including a public official, to conceal or fail to make such disclosures, see United States v. Geddings, 278 Fed. Appx. 281, 282, 287 n. 8 (4th Cir. 2008)8 (section 1346 provides notice of wrongfulness of conflicts of interest), cert. denied, 129 S. Ct. 435 (2008); see also ACBNY Conflict of Interest Report at 5-6 (“It is interesting, and significant, that contemporary America has shown itself keenly aware of the conflict of interest problem”), and (2) § 1346 prohibits schemes to do so.
8
In fact, such schemes
“[C]itation to unpublished dispositions in the Fourth Circuit is ‘disfavored’ but permissible.” Muntaqim v. Coombe, 366 F.3d 102, 112 n. 12 (2d Cir. 2004). -18-
are so obviously wrong that failure to disclose material conflicts of interest or other material information has long been recognized as one of the two “principal theories” or “core categories” of honest
services
fraud.
Kincaid-Chauncey,
556
F.3d
at
942;
Weyhrauch, 548 F.3d at 1247. As a result, similar void-for-vagueness-as-applied challenges to Section 1346 have been rejected. See United States v. Geddings, 2006 WL 4877548, at *3 (E.D.N.C. 2006) (rejecting public official’s argument that § 1346 is void for vagueness as applied because the “cases demonstrate that failing to disclose a conflict of interest can serve as part of a scheme or artifice to deprive another of the intangible right to honest services”), aff'd Geddings, 278 Fed. Appx. at 282, 287 n.8 (rejecting public official’s void-forvagueness-as-applied challenge to §§ 1341 and 1346 where conviction “based on his failure to disclose a conflict of interest” finding “that
the
language
of
the
statute
provides
notice
of
the
wrongfulness of Geddings’ conduct and adequately prevents arbitrary enforcement”); United States v. Bohonus, 628 F.2d 1167, 1169-70, 1173 (9th Cir.
1980) (rejecting contention, in private sector
honest services fraud case where employee induced insurance agent to pay him portion of agent's commissions but failed to disclose to employer “both his receipt of these payments and his concomitant conflict of interest,” that statute was void for vagueness as applied, explaining that “[t]he numerous decisions which have
-19-
applied § 1341 to employee disloyalty and to the deprivation of intangible rights in general afforded the defendant reasonable notice that his conduct might well fall within the proscriptions of the mail fraud statute. This court has held that it is not ‘. . . unfair to require that one who deliberately goes perilously close to an area of proscribed conduct shall take the risk that he may cross the line.’”).
Section 1346 is therefore not void for
vagueness as applied to this case. Despite the fact that defendant’s conduct falls squarely within the definition of one of the “principal theories” or “core categories” of honest services and that vagueness challenges must be evaluated on an “as-applied” basis,” Rybicki, 354 F.3d at 12930,
defendant
theoretical
offers
boundaries
a
lengthy including
discussion its
of
the
statute’s
application
to
hypothetical situations, Dismissal Memorandum at 9-19.
other But the
facts of this case, which limit defendant’s challenge, involve defendant’s failure to disclose conflicts of interest and related information.
Accordingly,
defendant’s
musings
about
whether
marginal offenses might be covered by § 1346 are inapplicable to his clearly prohibited activities. Similarly, whether or not this precise fact pattern has been the subject of a published opinion is immaterial.
See United
States v. Viertel, 2002 WL 1560805, at *8 (S.D.N.Y. 2002) (noting, in rejecting as applied void-for-vagueness challenge to § 1346,
-20-
that “‘it is immaterial [to a void-for-vagueness analysis] that there is no litigated fact pattern precisely on point’”) (quoting United States v. Ingredient Tech. Corp., 698 F.2d 88, 96 (2d Cir. 1983)); see also United States v. Josephberg, 418 F.Supp.2d 297, 301 (S.D.N.Y. 2005) (“[T]he fact that there is no litigated fact pattern precisely on point may constitute a tribute to the cupidity and ingenuity of the malefactors involved but hardly provides an escape from the penal sanctions. . . .”) (quoting United States v. Brown, 555 F.2d 336, 339-40 (2d Cir. 1977)).
As Judge Raggi
explained in her concurring opinion in Rybicki: Retaining flexibility to recognize that other schemes, not precisely fitting within the models identified by the majority today, could constitute honest services fraud does not establish the vagueness of § 1346. Rather, it acknowledges the reality of fraud, a crime of extraordinary variety, limited only by human imagination. See, e.g., United States v. Altman, 48 F.3d 96, 102 (2d Cir.1995) (holding that fraud needs no definition: “it is as old as falsehood and as versable as human ingenuity” (internal quotation marks and citations omitted)).” 354 F.3d at 155 (Raggi, J. concurring). It is also immaterial that there is disagreement among the circuits regarding whether materiality, as opposed to reasonably foreseeable harm, must be proven, and whether a violation of state criminal law must be proven.
This Circuit has resolved both
questions: it has adopted the materiality test, Rybicki, 354 F.3d at
145-46,
and
does
not
require
Margiotta, 688 F.2d at 124.
a
violation
of
state
law.
Moreover, “divergence in panel or
circuit views of a statute, criminal or otherwise, is inherent -21-
–
and common – in our multi-circuit system. establish vagueness.”
Disparity does not
Rybicki, 354 F.3d at 143; see also United
States v. Tannenbaum, 934 F.2d 8, 12 (2d Cir. 1991) (“We reject Tannenbaum’s attempt to elevate what has become a ‘split in the circuits,’ a not uncommon occurrence, into an argument that § 5313 must
therefore
violate
the
fair
warning
requirement
of
due
process.”) Finally, the scienter requirement for honest services fraud, which
requires
proof
of
“intent
to
deprive
another
of
the
intangible right of honest services,” Rybicki, 354 F.3d at 145, significantly
decreases
any
defendant’s vagueness claim. broad
language
of
the
ambiguity
and
further
defeats
See Margiotta, 688 F.2d at 129 (“The
statute,
intended
by
Congress
to
be
sufficiently flexible to cover the wide range of fraudulent schemes mankind is capable of devising, is not unconstitutionally vague because § 1341 contains the requirement that the defendant must have acted willfully and with a specific intent to defraud.”)9 In sum, defendant cannot establish that he “could not have known that the conduct underlying [his] conviction[] could be
9
Defendant repeatedly cites to a twenty-five-year-old law review article written by the United States Attorney when he was a third-year law student. See March 2, 2009 Letter from then Acting United States Attorney Andrew T. Baxter to Mr. Lowell (Attachment A). To the extent that the article questions whether Congress intended for the mail fraud statute to protect the intangible right to honest services, that question was answered by the enactment of 18 U.S.C. § 1346, five years after the article was published. -22-
considered ‘depriv[ing] another of the intangible right of honest services.’”
United States v. Warner, 498 F.3d 666, 697 (7th Cir.
2007), cert. denied, 128 S. Ct. 1329 (2008); see United States v. Sawyer, 239 F.3d 31, 43 n. 13 (1st Cir. 2001) (summarily rejecting similar argument and stating defendant “also claims that his prosecution offended due process by not giving him sufficient notice of what conduct is proscribed under federal law.
As we have
already noted, Congress enacted § 1346 in 1988 to prohibit schemes to deprive the public of their public officials’ honest services. Accordingly, Sawyer had sufficient notice that his conduct could be prosecuted as a federal crime.”)10
10
Defendant also contends that the use of the phrase “disinterested decision making” renders the Indictment vague, Dismissal Memorandum at 19-20, but that phrase, which is used by the courts to refer to decisions made free of conflicts of interest, Kincaid, 556 F.3d at 944; Panarella, 277 F.3d at 694-95; Antico, 275 F.3d at 263; Middlemiss, 217 F.3d at 120; Woodward, 149 F.3d at 55, 62; United States v. Sawyer, 85 F.3d 713, 724 (1st Cir. 1996), is entirely proper. Indeed, the phrase is included in the Government’s Proposed Jury Instructions (filed today), and its use is not surplusage. See United States v. Derosier, 501 F.3d 888, 897-98 (8th Cir. 2007) (rejecting surplusage argument where “in reckless disregard of the interests of” had been approved in jury instruction as acceptable specification of term “intent to defraud”). Defendant makes a similar complaint about the term “full disclosure of the potential motivation behind official acts,” Dismissal Memorandum at 19-20, but it too is used by courts, Kincaid, 556 F.3d at 944-45; Panarella, 277 F.3d at 695; Antico, 275 F.3d at 263; Woodward, 149 F.3d at 62; Sawyer, 85 F.3d at 724, is included in the proposed jury instructions, and is proper here. -23-
B.
The Allegations of the Indictment are Relevant and Sufficient to Charge Defendant With Honest Services Mail and Wire Fraud. Defendant contends that the allegations of the Indictment do
not amount to a crime, but these arguments are based on mistaken views of the law.
First, based on the misapprehension that the
statute of limitations also operates as a rule of evidence to bar relevant evidence that predates the limitations period, defendant asks the Court to strike relevant allegations in the Indictment and to dismiss the Indictment.
Second, despite the fact a state law
violation is not an element of honest services fraud, defendant takes the position that because the Indictment contains allegations concerning state law (which are made because they are relevant to defendant's intent, to his motive, and for other relevant reasons), a state law violation is therefore an element of the offense. Finally, defendant submits evidence and makes arguments contrary to the allegations of the Indictment. 1.
Acts Which Occurred Before June 30, 2003 are Relevant to the Honest Services Fraud Scheme and May Not Be Stricken Simply Because They Are Outside the Statute of Limitations.
Defendant argues that references to conduct prior to June 30, 2003 should be stricken because acts which occurred outside of the limitations period11 are irrelevant as well as prejudicial and inflammatory, and “allow the government to effectively prosecute 11
The relevant date for the statute of limitations is June 30, 2003 because defendant executed statute of limitations waivers from June 30, 2008 forward. -24-
[defendant] for conduct that is time-barred.”
Memorandum in
Support of Motion to Strike Surplusage (“Surplusage Memorandum”) at 3,
4-5.
Defendant
repeats
these
arguments
in
a
separate
Memorandum in Support of Motion to Dismiss for Failure to Satisfy the Statute of Limitations (“Limitations Memorandum”), and also asserts that if the charged mailings or wires “depend on the previous, time-barred conduct to make out an offense,” then the entire Indictment must be dismissed,
but that “even if they do not
. . . [the] Court must strike from the Indictment those events occurring outside of the limitations period, [and] [w]ith the Indictment altered so significantly, this Court cannot know whether the grand jury would still indict.”
Limitations Memorandum at 12.
The assumption underlying all of these arguments – that the statute of limitations, a rule limiting when prosecutions are brought, somehow bars the admission of relevant evidence – is wrong. The law is settled that a motion to strike surplusage from an Indictment may be granted only if the challenged allegations are “not
relevant
prejudicial.”
to
the
crime
charged
and
are
inflammatory
and
United States v. Mulder, 273 F.3d 91, 99 (2d Cir.
2001); accord United States v. Sharifipour, 2006 WL 1007661, at *10 (N.D.N.Y. 2006).
Courts have interpreted this standard to be
exacting; it is met only in rare cases where it is “clear” that the allegation is both irrelevant and inflammatory and prejudicial. United States v. Tomero, 496 F.Supp. 2d 253, 255 (S.D.N.Y. 2007);
-25-
see also id. (noting that “it has long been the policy [of the courts in the Southern District of New York] . . . to refrain from tampering with indictments”) (quotation omitted). relevant
evidence
may
not
prejudicial the language is.”
be
stricken
Furthermore,
“regardless
of
how
United States v. Scarpa, 913 F.2d
993, 1013 (2d Cir. 1990) (quotation omitted); see also Sharifipour, 2006 WL 1007661, at *10 (“There are two distinct elements to the inquiry; namely, relevance and prejudice.
Thus, the degree of
prejudice is generally of no moment if the allegation is relevant and admissible.”). A statute of limitations is “‘a defense . . . not a rule of evidence . . . [it] has no bearing on the admissibility of evidence.’”
Sir Speedy, Inc. v. L & P Graphics, Inc., 957 F.2d
1033, 1038 (2d Cir. 1992) (civil case) (quoting United States v. Ashdown, 509 F.2d 793, 798 (5th Cir. 1975)); United States v. Cisneros, 203 F.3d 333, 348 n. 13 (5th Cir. 2000) (same).
In other
words, “[s]tatutes of limitation put time limits on when actions may be brought; they are not evidentiary rules that blind courts from consideration of relevant facts”.
Article II Gun Shop, Inc.
v. Gonzales, 441 F.3d 492, 496 (7th Cir. 2006) (quoting and agreeing with the government). As a result, otherwise admissible evidence is not excluded merely because it predates the limitations period.
See United
States v. DeFiore, 720 F.2d 757, 764 (2d Cir. 1983) (stating, in
-26-
the context of evidence offered pursuant to Fed. R. Crim. P. 404(b), “[c]learly, the prior act evidence adduced here went directly to establishing [defendant’s] intent, as well as the preparations and plans that went into the scheme to defraud, and such
evidence
is
admissible
even
though
it
antedates
the
limitations period.”) (internal citation omitted); see also United States v. Read, 658 F. 2d 1225, 1240 (7th Cir. 1981) (“Of course, as in any prosecution, proof of conduct prior to the statute of limitations is admissible to show the scheme and intent.”).
This
rule makes good sense because “[i]t would be a bizarre result indeed if a crime properly prosecuted within the limitations period could not be proven because an essential element, such as intent, could only be established by proof of incidents occurring outside the period.”
Cisneros, 203 F.3d at 348 n.13 (quoting Ashdown, 509
F.2d at 798).12
12
Relying on dicta from cases challenging indictments following conviction, defendant attempts to create law imposing a new limit on indictments: allegations which the government could, but need not, offer at trial must be stricken as surplusage. Surplusage Memorandum at 2, 4. This is clearly not so because courts “may admit evidence that does not directly establish an element of the offense charged, in order to provide background for the events involved in the case.” United States v. Skowronski, 968 F.2d 242, 246 (2d Cir. 1992); see also United States v. Dula, 989 F.2d 772, 777-78 (5th Cir. 1993) (“[i]n developing proof of intent and motive, the prosecution may offer all of the surrounding circumstances that were relevant” including a wire transmission not charged in the indictment because “it was relevant to the existence of the scheme and therefore was independently admissible as direct proof of the scheme charged.”). Not surprisingly, defendant’s argument has been rejected. See United States v. Yeaman, 987 F. Supp. 373, 376-77 (E.D. Pa. 1997) (“Language is properly included -27-
Here, all of the pre-limitations allegations, including those highlighted by defendant, refer to relevant evidence admissible to establish
the
Indictment,
existence
defendant’s
of
the
intent
single to
scheme
defraud,
alleged
his
in
the
motive,
and
pertinent background. The examples highlighted by defendant – such as defendant’s failure to disclose to the Legislative Ethics Committee that he would be contacting labor union officials on behalf of McGinn, Smith, Indictment ¶ 36; defendant’s creation of a sham invoice to make it falsely appear that he had performed work for a $15,000 payment from Leonard J. Fassler when, in fact, he had done nothing, id. at ¶ 43; and his failure to make disclosures required not only by securities laws, but also his contracts with
in an indictment if it pertains to matters which the government will prove at trial. These matters need not be essential elements of the offense if they are in a general sense relevant to the overall scheme charged, or contain relevant background information.”) (citations and quotation marks omitted); United States v. Giampa, 904 F. Supp. 235, 271 (D.N.J. 1995) (“If the Government intends to properly prove a matter at trial, then it is proper for the indictment to include those matters, even if they are not ‘essential elements’ of the crime charged.”) Neither United States v. Rosenthal, 9 F.3d 1016, 1023 (2d Cir. 1993), nor United States v. McIntosh, 23 F.3d 1454, 1457 (8th Cir. 1994) is to the contrary. Those cases rejected arguments challenging convictions where the government did not prove certain allegations in the indictment (in Rosenthal, the district court removed the words “false and fraudulent” from the indictment before instructing the jury, while in McIntosh, the indictment alleged that defendant possessed a gun which did not exist). Indeed, in Rosenthal, the Second Circuit actually concluded that “allegations in an indictment that go beyond the essential elements which are required for conviction do not increase the Government’s burden.” Rosenthal, 9 F.3d at 1023. -28-
Wright Investors’ Service (“Wright”), id. at ¶¶ 25-27 – are clearly relevant to whether defendant devised a scheme to deprive another of the intangible right of honest services, the origin and duration of the scheme, and defendant’s intent and motive, among other issues. In an attempt to strike the pre-limitations allegations, defendant argues that events occurring prior to June 30, 2003 were not in furtherance of the underlying fraud scheme. See Limitations Memorandum at 11.
But this argument is based on a myopic reading
of the indictment, which alleges, for example, that: (1) during the entire time period between 1994 and 2006, defendant “would contact persons or entities who had business before the Legislature or State agencies, including union officials, thereby exploiting his official position for personal compensation and enrichment, knowing and believing that his reasonably perceived ability to influence official
action
would,
at
least
in
part,
motivate
those
he
contacted to enter into financial relationships beneficial to his personal financial interests,” Indictment ¶ 19, (2) defendant contacted at least sixteen unions, id. at ¶ 22, (3) he was paid for clients Wright obtained as a result of defendant’s referral, id. at ¶ 24-26, and (4) eleven union pension funds became Wright clients after his contact, id. at ¶ 28.
The Indictment further alleges
that these payments were made throughout the period between 1994 and 2006, ¶ 21.
As a result, so long as defendant was receiving
-29-
payments (and even while he was merely trying to obtain business from an entity with interests before the legislature), he labored under a substantial conflict of interest whose non-disclosure was material.
Given these allegations, the entire scheme is relevant
evidence and is not barred by the statute of limitations.13
United
States v. Wright, 1990 WL 78035, at *3 (N.D. Ill. 1990) (rejecting argument that references in the indictment to conduct outside the limitations period should be stricken because that argument “runs contrary to the well established principle that events occurring prior to the limitations period are relevant to establish a scheme to defraud and the defendants’ intent.”)
13
Defendant also argues that the McGinn, Smith allegations are irrelevant, Surplusage Memorandum at 6-7, because none of the alleged mailings and wire transmissions directly involve McGinn, Smith, but the absence of a charged mailing or wire transmission directly related to one portion of a single scheme does not undermine the relevance of that evidence. See United States v. Pharis, 298 F.3d 228, 233-34 (3d Cir. 2002) (finding, in mail fraud case where there was a single scheme to inflate consulting bills submitted to insurance company, that the district court was “plainly mistaken” when it concluded that evidence regarding bills charged manually, before the bills were computerized, “could not be part of the mail-fraud scheme” because the charged mailings related to computerized bills and observing that “[i]t is not of any legal significance that the mailings used to bring the scheme under the mail-fraud statute occurred at the end of this single scheme. A fraudulent scheme can span many years with the mailings occurring only at the end of the period.”). Furthermore, the McGinn, Smith allegations are relevant to establishing a scheme because what defendant did for McGinn Smith – directing Wright to use McGinn, Smith as a broker for certain union pension fund accounts defendant solicited for Wright – was inextricably intertwined with defendant’s contact with those same unions for Wright. As a result, defendant was burdened with the same conflicts of interest for payments from McGinn, Smith as he was for payments from Wright. -30-
Indeed, contrary to defendant’s argument, it is quite common for evidence of conduct outside the limitations period to be admitted; the issue the defense normally raises is whether the last mailing or wire was within the limitations period, not that the statute of limitations should operate as a rule of evidence to bar admission of pre-limitations conduct. 974
F.2d
246,
263
(2d
Cir.
1992)
See United States v. Eisen, (“However,
the
statute
of
limitations in a mail fraud case runs from the date of the charged mailing, notwithstanding that the defendant’s actions concerning the scheme to defraud occurred before the statutory period.”); United States v. Scop, 846 F.2d 135, 139 (2d Cir. 1988) (“While it is true that the great majority of criminal acts occurred prior to the limitations date of July 22, 1981, the evidence . . . was sufficient
to
permit
a
rational
jury
to
conclude
that
the
conspiracy and substantive scheme to defraud continued.”); see also United States v. Heacock, 31 F.3d 249, 256-57 (5th Cir. 1994) (evidence
that
defendant
concealed
nature
and
extent
of
his
bookmaking operation from the IRS in sixteen different ways “bears on the existence of the scheme to defraud,” and even evidence relating to events which occurred before the limitations period was properly admitted).
-31-
2.
Evidence Regarding Defendant’s Non-Compliance With State Law is Relevant and Admissible to Defendant’s Intent and Motive, and To Assist the Jury In Understanding the Actions of Participants, But Allegations of State Law in the Indictment Do Not Transform Violation of State Law Into An “Element” of Honest Services Fraud.
Defendant contends that the presence of state law allegations in the indictment has transformed a state law violation into an element of honest services fraud.
Dismissal Memorandum at 36-37.
He is mistaken. In this Circuit (as in most), violation of a state law is not an essential element of honest services mail fraud. Margiotta, 688 F.2d at 124 (“a violation of local law is not an essential element [of mail fraud].”)14 Moreover, evidence of state statutes, and
14
Pre-McNally, the Circuits, including the Second Circuit, took the unanimous view that a state law violation was not an element of honest services fraud and need not be proven. See, e.g., United States v. Martin, 195 F.3d 961, 966 (7th Cir. 1999) (citing cases). Post-McNally, four federal appellate courts (the First, Fourth, Ninth, and Eleventh Circuits) have reached the same conclusion. Weyhrauch, 548 F.3d at 1246; United States v. Hasner, 340 F.3d 1261, 1269 (11th Cir. 2003); Sawyer, 239 F.3d at 41-42; United States v. Bryan, 58 F.3d 933, 940 (4th Cir. 1995). Only the Fifth Circuit has concluded that a state law violation must be alleged and proven in an honest services fraud case, and it has also concluded that violation of a misdemeanor statute is sufficient (and did not need to decide whether a civil violation would be sufficient). United States v. Brumley, 116 F.3d 728, 734, 735-36 (5th Cir. 1997). In Panarella, the Third Circuit stated that it “need not decide whether a violation of state law is always necessary for nondisclosure to amount to honest services fraud,” 277 F.3d at 693, because a violation of Pennsylvania’s misdemeanor disclosure statute was proven. Id. at 694. In United States v. Jennings, 487 F.3d 564 (8th Cir. 2007), the Eighth Circuit did not decide whether a state law violation was necessary because defendant had violated a Minnesota statute requiring disclosure of potential conflicts. Id. at 578. -32-
whether a public official violated or complied with them, is relevant and admissible (1) to show the public official’s intent, see United States v. Jennings, 487 F.3d 564, 580 (8th Cir. 2007) (district
court’s
instructions
“correctly
stated
that
the
compliance or non-compliance with [state disclosure statutes] is only
evidence
relating
to
[defendant-legislator’s]
intent
to
defraud”); United States v. Keane, 522 F.2d 534, 554 (7th Cir. 1975) (district court instructed jury that in deciding whether defendant defrauded citizens of right to have city’s affairs conducted “free from conflict of interest,” jury may consider state statutes and city ordinances, inter alia, “as relevant to the defendant’s intent to defraud if any such intent existed.”), (2) to show motive, see United States v. Brechtel, 997 F.2d 1108, 1115, 1116 (5th Cir. 1993) (in prosecution under 18 U.S.C. § 1006’s “conflict of interests prohibition,” testimony that regulation prohibited interested director transactions “properly tended to demonstrate the defendants’ motive for nondisclosure”), and (3) to assist the jury in understanding the actions and conduct of the participants. See United States v. McElroy, 910 F.2d 1016, 1023-24 (2d Cir. 1990) (evidence of “Regulation U” properly admitted so witnesses
could
explain
basis
for
lending
policies
and
creditworthiness determinations as they related to defendant’s loan application);
see
also
Brechtel,
997
F.2d
at
1115
n.
27
(describing cases in which courts have admitted civil violation
-33-
evidence in criminal prosecutions to show motive and to assist jury in understanding conduct or transactions). Here, the Indictment quotes from state statutes because those statutes are probative of defendant’s intent and motive, and as background to assist the jury in understanding the actions of participants.15 statutes
will
government
Evidence be
of
admissible
anticipates
that
defendant’s for
the
the
same
evidence
demonstrate defendant violated state law.16 Indictment
includes
allegations
violations
regarding
of
purposes, at
trial
those
and
will
the also
The fact that the state
law
does
not
somehow overrule the Second Circuit’s clear holding that proof of a violation of state law is not an element of honest services fraud.
See Rosenthal,
9 F.3d at 1022 (“allegations in an
indictment that go beyond the essential elements which are required for conviction do not increase the Government’s burden”).
15
As discussed infra at 52-54 in connection with defendant’s motion to strike references to SEC Rule 206(4)-3, 17 C.F.R. § 275.206(4)-3(a)(2), as surplusage, evidence regarding that rule is admissible for the same reasons. 16
Such proof would obviate any defense request for the Second Circuit to convene in banc to reconsider that issue. To the extent that there is a difference between a “material conflict of interest” and a “substantial conflict” as the latter term is used in N.Y. Pub. Off. Law § 74(2), both are covered by a fair reading of the allegations in the Indictment, and the evidence at trial will show a violation of both. Cf. United States v. Brechtel, 997 F.2d 1108, 1120 (5th Cir. 1993) (board member of financial institution is “classic fiduciary who owes institution affirmative duty to disclose all potentially substantial conflicts of interest”). -34-
Not only is a state law violation not required, but a state’s failure to make particular activity criminal does not bar federal prosecution pursuant to the mail fraud statute.
See United States
v. Porcelli, 865 F.2d 1352, 1358 (2d Cir. 1989) (mail fraud prosecution for scheme where defendant failed to turn over sales taxes to New York State did not violate due process clause even though, under state law, failure to turn over sales taxes was a civil, not a criminal violation, because “focus” of both wire and mail fraud statutes is upon misuse of wires or mails “not the regulation of state affairs”).
This makes sense “[b]ecause laws
governing official conduct differ from state to state, [and] conditioning mail fraud convictions on state law means that conduct in
one
state
might
violate
the
fraud
statute,
identical conduct in a neighboring state would not.”
whereas
Weyhrauch,
548 F.3d at 1246. 3.
Accepting the Allegations in the Indictment As True, as Required When Assessing the Sufficiency of an Indictment, This Indictment Charges a Valid Offense.
Defendant contends that the Indictment does not charge an offense because (a) certain allegations are not supported with evidentiary detail, and (b) evidence submitted by defendant shows that he did not violate state law.
Defendant, in making arguments
contrary to the allegations in the Indictment and submitting extrinsic
evidence,
has
violated
the
legal
adjudicating a motion to dismiss an indictment.
-35-
principles
for
A defendant moving to dismiss an indictment “must meet a high standard.”
United States v. Lazore, 90 F. Supp. 2d 202, 203
(N.D.N.Y. 2000). In the Second Circuit, “[i]t is well settled that ‘an indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense.’
Hamling v. United States, 418 U.S. 87, 117 (1974).”
United States v. Alfonso, 143 F.3d 772, 776 (2d Cir. 1998).17 Although “an indictment must charge[] a crime with sufficient precision to inform the defendant of the charges he must meet and with enough detail that he may plead double jeopardy in a future prosecution based on the same set of events. . . an indictment need do little more than to track the language of the statute charged and state the time and place (in approximate terms) of the alleged crime.” Id. (internal citation and quotations omitted). Defendant is “entitled to a short, concise statement of facts constituting the offense charged, but he is not entitled to know the evidentiary details with which the government intends to convict him.”
United States v. Cerone, 830 F.2d 938, 951 (8th Cir.
1987) (indictment charging that defendant traveled in interstate
17
Materiality is an element of the offense at trial, but sections 1341, 1343, and 1346 do “material,” and an indictment need not “material.” United States v. Klein, 476 F.3d cert. denied, 128 S. Ct. 804 (2007). -36-
which must be proven not contain the word include the word, 111, 113 (2d Cir.),
commerce with intent to promote illegal activity need not specify particular acts that defendant did in furtherance of illegal activity); see United States v. Weiss, 491 F.2d 460, 466 (2d Cir. 1974) (unnecessary to allege more specifically than failure to produce documents conduct by which defendants corruptly endeavored to obstruct justice; “such details need not be alleged”); see also United States v. Musacchio, 968 F.2d 782, 787 (9th Cir. 1991) (government
not
required
to
“list
supporting
evidence”
in
indictment); United States v. Moody, 923 F.2d 341, 351 (5th Cir. 1991) (indictment need not set out “evidentiary details”); United States v. Muskovsky, 863 F.2d 1319, 1326-27 (7th Cir. 1988) (in Travel
Act
prosecution,
no
requirement
that
indictment
“specifically identify” the “illegal acts [defendants] performed or facilitated following their use of interstate facilities”). The government is not making “a full proffer of the evidence it intends to present at trial” and therefore, sufficiency of the evidence is not in issue here.
United States v. Alfonso, 143 F.3d
772, 776 (2d Cir. 1998); United States v. Elliott, 363 F. Supp. 2d 439, 450 (N.D.N.Y. 2005); see United States v. Bicoastal Corp., 819 F. Supp. 156, 158 (N.D.N.Y. 1993) (citations omitted) (“It has long been held that the criminal analog to civil summary judgment motions, referred to in the colloquialism of the past as ‘speaking motions,’ are not allowed by Fed. R. Crim. P. 12(b).”)
-37-
In assessing the sufficiency of an indictment, the court must “examine the indictment as a whole, accept as true the facts alleged, and determine only whether the indictment is valid on its face.”
United States v. Elliott, 363 F. Supp. 2d 439, 450
(N.D.N.Y. 2005).
In addition to assuming that all facts in the
indictment are true, the Court must “‘view all facts in the light most favorable to the government.’” United States v. Rezko, 2007 WL 2904014, at *3 (N.D. Ill. 2007) (quoting United States v. Yashir, 166 F.3d 873, 880 (7th Cir. 1999)).
“The defendant’s contrary
assertions of fact will not be considered.” Barta, 635 F.2d 999, 1002 (2d Cir. 1980).
United States v. Von .. . . . . .
Applying these principals, it is clear that the Indictment is sufficient.
The
Indictment
alleges
that
defendant
took
discretionary action benefitting the labor unions, Leonard J. Fassler, Jared E. Abbruzzese, Russell C. Ball and/or their related entities, and this Court must accept this allegation as true even though the evidentiary details on which these allegations are based are not contained in the Indictment.18
18
In addition to the Indictment, as discussed in more detail infra at 60-61, the government has also provided defendant with “documents of particular relevance” which identify official actions defendant took and his extensive involvement in legislation, grants, and behind-the-scenes activity benefitting the labor unions, Fassler, Abbruzzese, and Ball. As a result of the production of the “documents of particular relevance,” defendant is aware of documentation concerning his official acts and appears to be making a technical pleading argument. But under applicable law, there is no need for the government to include such allegations in the indictment. -38-
Defendant also contends that the Indictment is insufficient because it does not “identify a single official act that was compromised by Mr. Bruno’s alleged self-interest, motivations, or by an actual conflict of interest,” Dismissal Memorandum at 20. But the government need not prove that the defendant’s actions resulted in a tangible loss to the public. Jennings, 487 F.3d at 580; Woodward, 149 F.3d at 54-55; cf. United States v. Wallach, 935 F.2d 445, 463-64 (2d Cir. 1991) (scheme to conceal true nature of dealings and ultimate recipients of payments violates mail fraud statute), nor does the government need to prove that the concealed financial interests improperly influenced any official actions. Panarella, 277 F.3d at 680; Kincaid-Chauncey, 556 F.3d at 943-44. Furthermore, it is not a defense to honest services fraud that,
had
there
been
no
deprivation
of
the
right
to
honest
services, the defendant might have lawfully and properly performed the same act, or that the actions taken by the defendant were desirable or beneficial to the public. Cf., e.g., United States v. Orenuga, 430 F.3d 1158, 1165-66 (D.C.Cir. 2005) (instruction that “[i]t is not a defense to the crime of bribery that had there been no bribe, the public official might have lawfully and properly performed the same act” not erroneous); 1A Kevin F. O’Malley et al., Federal Jury Practice & Instructions § 27.11(“Official Act” Was Lawful - No Defense) (6th ed. 2008); see also City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 378 (1991) (“A mayor is guilty of accepting a bribe even if he would and should -39-
have taken, in the public interest, the same action for which the bribe was paid.”) Finally, the Indictment alleges that defendant made false statements on his annual statements of financial disclosure, and the Court must accept this allegation as true.
Neither the
evidence defendant submitted, nor his argument, can undermine the allegation for purposes of his motion to dismiss.19 In sum, the Indictment here is more than adequate to survive a motion to dismiss.
The allegations are plainly sufficient to
inform defendant of the charges which he must meet, and place this case within the heartland of honest services fraud cases.
This
case should proceed to trial. C.
The Honest Services Fraud Statute is a Clear Exercise of Congress’s Power and Does Not Violate Any Federalism Principles.
Both before and after McNally, Courts of Appeals have rejected federalism challenges to honest services fraud prosecutions of public officials because Congress may prohibit use of the mail “in furtherance of a scheme that it regards as contrary to public policy, whether it can forbid the scheme or not.”
19
Badders v.
Similarly, defendant’s contention that he merely held lawful part-time employment contradicts the allegations that he did not perform legitimate work commensurate with payments he received, Indictment ¶¶ 44, 51, 55, and that the only services he provided to Wright was to contact union officials who had interests before New York State, understanding that his official position would provide Wright with opportunities to obtain and retain business from union funds that would not, in the absence of his official position, otherwise have been available. Id. at ¶ 31. -40-
United States, 240 U.S. 391, 393 (1916); see Weyhrauch, 548 F.3d at 1246 (post-McNally honest services fraud case involving conduct of then-Alaska legislator); Sawyer, 85 F.3d at 723-24 (post-McNally honest services fraud case involving conduct of lobbyist regarding Massachusetts legislator); United States v. Castro, 89 F.3d 1443, 1456 (11th Cir. 1996) (post-McNally honest services fraud case involving conduct of state court judge); United States v. Silvano, 812 F.2d 754, 758 (1st Cir. 1987) (pre-McNally honest services fraud case involving conduct of Boston budget director); cf. Margiotta, 688 F.2d at 124 (relying on Badders, holding that state law violation is not an essential element of mail fraud). The same analysis supports the constitutionality of honest services wire fraud.
Cf. United States v. Siembida, 2008 WL 4703015, at *5
(S.D.N.Y. 2008) (rejecting argument that “a conviction based upon a facially intrastate communication that only incidentally crossed state
borders
exceeds
Congress’s
Commerce
Clause
power
to
regulate”). Additional authority for Section 1346 explicitly invoked by Representative Conyers is the Guarantee Clause. See 134 Cong. Rec. H11108-01, 1988 WL 182261 (daily ed. Oct. 21, 1988) (statement of Rep. Conyers) (“Some questions were raised during the Criminal Justice Subcommittee’s hearing on the McNally decision regarding the Federal Government’s constitutional role in prosecuting State
-41-
and local corruption. I believe that the guarantee clause of the U.S.
Constitution,
article
IV,
section
4
can
be
used
as
a
constitutional basis for Congress to pass criminal legislation relating to corruption in local government. See, A. Kurland, “The Guarantee Clause as a Basis for Federal Prosecutions of State and Local Officials” 62 So. Cal. [Law] Rev. [367 (1989)]. The fact that Congress has the power to enact a statute like the honest services fraud provision was even alluded to by the Supreme Court in McNally: It may well be that Congress could criminalize using the mails to further a state officer’s efforts to profit from governmental decisions he is empowered to make or over which he has some supervisory authority, even if there is no state law proscribing his profiteering or even if state law expressly authorized it. But if state law expressly permitted or did not forbid a state officer such as Gray to have an ownership interest in an insurance agency handling the State’s insurance, it would take a much clearer indication than the mail fraud statute evidences to convince us that having and concealing such an interest defrauds the State and is forbidden under federal law. 483 U.S. at 361 n. 9. Finally, to the extent that the Supreme Court may require Congress to speak clearly when creating federal criminal laws in areas traditionally regulated by the states, see Rybicki, 354 F.3d at 137 n. 10 (“Perhaps it can be argued nonetheless, in light of the Supreme Court’s later Commerce Clause cases, that if Congress wants to federalize such crimes it should do so in definite terms”), the Second Circuit has already concluded that “when
-42-
Congress enacted section 1346 in the light of the pre-McNally cases, it spoke with sufficient clarity to obviate the danger that federal courts, rather than Congress, would determine how deeply into traditionally state concerns the federal government ventured,” id. In sum, “Congress has a legitimate interest in ensuring that state
action
influenced
affecting
by
personal
federal
priorities
motivations
of
is
state
not
improperly
policymakers
and
regulators, and the happenstance of whether state law prohibits particular conduct should not control Congress’ ability to protect federal interests through the federal fraud statutes, which are predicated on valid federal constitutional authority to regulate the mails.” D.
Weyhrauch, 548 F.3d at 1246.
The Model Grand Jury Charge is Not Unconstitutional.
Defendant challenges the constitutionality of the Federal Judicial Conference’s Model Grand Jury Charge (March 2005) (the “model charge”). Defendant’s argument – that portions of the model charge infringe on the grand jury’s right to refuse to indict even when presented with evidence establishing probable cause (in effect a grand jury nullification argument) and improperly vouch for prosecutors
thereby
encouraging
deference
to
their
judgment
regarding probable cause, Memorandum in Support of Motion For Disclosure of the Grand Jury Charge and to Dismiss the Indictment (“Grand Jury Memorandum”) at 6-15, – have been rejected by both
-43-
Circuit courts which have considered whether the model charge is constitutional. Assuming, arguendo, that the magistrate judge used the model charge when instructing the grand jury which returned this Indictment, this Court should reach the same conclusion.20 Defendant focuses on four portions of the model charge which instruct grand jurors that they (1) they “cannot judge the wisdom of the criminal law enacted by Congress,” (the “wisdom of the law” instruction), (2) they “should not consider punishment in the event of conviction” when deciding whether to indict, (the “punishment” instruction), (3) their “task is to determine” whether the evidence presented is sufficient to “cause you to conclude that there is probable cause to believe that the accused is guilty of the offense charged.
To put it another way, you should vote to indict where
the evidence presented . . . is sufficiently strong to warrant a reasonable person’s belief that the person being investigated is probably guilty of the offense charged,” (the “task” and “should indict”
instruction),
and
(4)
“[i]f
past
experience
is
any
indication of what to expect in the future, then you can expect candor,
honesty
and
good
faith
20
in
matters
presented
by
the
It is not clear that the “particularized need” standard argued by defendant, Grand Jury Memorandum at 3-4, is applicable. See United States v. Alter, 482 F.2d 1016, 1029 n. 21 (9th Cir. 1973) (“The proceedings before the grand jury are secret, but the ground rules by which the grand jury conducts those proceedings are not.”) Regardless of the applicable standard, however, defendant has not shown any basis to obtain the charge because the model charge is constitutional. -44-
government
attorneys”
instruction).
(the
“candor,
honesty,
and
good
faith”
Model Charge at ¶¶ 9, 10, 25, and 31.
The Ninth Circuit has rejected each and every one of these arguments.
See United States v. Narvarro-Vargas, 408 F.3d 1184,
1202, 1204, 1206, 1208 (9th Cir. 2005) (en banc) (holding that the challenged instructions of the model charge –
the “wisdom of the
criminal laws,” “task and should indict,” and “candor, honesty, and good faith” instructions – are constitutional); United States v. Adams,
343
F.3d
1024,
1027
n.1
(9th
Cir.
2003)
(summarily
concluding, after appellant argued in his brief that the district court
erred
by
giving
the
grand
jurors
the
“punishment”
instruction, see Adams’ Opening Brief at 11, that “the model charge did not misstate the constitutional role and function of the grand jury” thereby affirming that portion of the model charge without discussion).
See also United States v. Cedano-Arellano, 332 F.3d
568, 573 (9th Cir. 2003) (holding that it was proper to instruct grand jury that “they had a duty to indict him if they found probable
cause
to
believe
he
was
guilty”);
United
States
v.
Marcucci, 299 F.3d 1156, 1159-65 (9th Cir. 2002) (holding that the model charge was not unconstitutional after examining the “should indict” instruction and holding that it was not error to refuse to give a grand jury nullification charge). The Eleventh Circuit, in reviewing, inter alia, instructions, which it concluded were “significantly similar to the Navarro-
-45-
Vargas [wisdom of the law and should indict] instructions,” decided to “follow Navarro-Vargas because its reasoning is sound.”
United
States v. Knight, 490 F.3d 1268, 1272 (11th Cir. 2007), cert. denied, 128 S. Ct. 547 (2007).
As the Eleventh Circuit explained,
“The grand jury could easily understand it was independent from the court and could indict or not based upon the evidence.”
Id.
at
1272; see also United States v. Hooks, 2005 WL 3370549, at *14 (W.D. Tenn. 2005) (“The Court finds the reasoning of the Ninth Circuit to be persuasive.
Because neither [the wisdom of the law
nor
instruction
the
should
indict]
alters
or
restricts
the
independence and discretion of the grand jury, nor is inconsistent with its constitutional role and function, the Court concludes that the purported instructions are not in violation of the Fifth Amendment.”). Setting aside for the moment the “candor, honesty, and good faith” instruction, defendant’s remaining arguments all challenge perceived limits on the grand jury’s ability to nullify.21
But the
Second Circuit, in the context of trial juries, has strongly condemned nullification, describing it as a power, not a right to be encouraged or even knowingly permitted.
See United States v.
Thomas, 116 F.3d 606, 614, 615 (2d Cir. 1997) (“We categorically
21
Although it is tempting to view nullification as an expression of the community’s conscience as reflected in “acquittals in fugitive slave cases,” in reality, however, there are also “shameful examples of how nullification has been used to sanction murder and lynching.” Thomas, 116 F.3d at 616. -46-
reject the idea that, in a society committed to the rule of law, jury nullification is desirable or that courts may permit it to occur when it is within their authority to prevent. . . . [T]he power of juries to ‘nullify’ or exercise a power of lenity is just that – a power; it is by no means a right or something that a judge should encourage or permit if it is within his authority to prevent.”).
Indeed, “[a] jury has no more ‘right’ to find a
‘guilty’ defendant ‘not guilty’ than it has to find a ‘not guilty’ defendant guilty, and the fact that the former cannot be corrected by a court, while the latter can be, does not create a right out of the power to misapply the law.
Such verdicts are lawless, a denial
of due process and constitute an exercise of erroneously seized power.”
Id. at 615-16 (quoting United States v. Washington, 705
F.2d 489, 494 (D.C. Cir. 1983) (per curiam)). As a result of these principles, in the Second Circuit, criminal defendants are not entitled to a jury nullification instruction at trial.
Id. at 616 n.9.
These sound principles have
equal force in the context of grand juries. Not surprisingly then, there
is
no
constitutional
authority right
to
supporting instruct
the a
idea
grand
that
jury
there
that
it
is
a
“has
unlimited discretion to decide whether to indict even when it finds probable cause.”22
Marcucci, 299 F.3d at 1161.
22
The Supreme Court’s statement in Vasquez v. Hillery, 474 U.S. 254, 263 (1986) that “‘[t]he grand jury is not bound to indict in every case where a conviction can be obtained.’ United States v. -47-
Given that it is inappropriate to instruct the grand jury regarding nullification, it is entirely appropriate that the grand jury should be instructed not to consider punishment23 or the wisdom of the law because such concerns are irrelevant to probable cause and would only go to nullification.
See Navarro-Vargas, 408 F.3d
at 1204 (“we cannot say that the grand jury’s power to judge the wisdom of the laws is so firmly established that the district court must either instruct the jury on its power to nullify the laws or remain silent”). This also holds true for instructing the grand jury that it “should” indict upon finding probable cause.
The use of the word
“should,” as opposed to a command such as “must” or “shall,” “does not ‘eliminate discretion on the part of the grand jurors,’ leaving room for the grand jury to dismiss even if it finds probable cause.” Id. at 1205-06
(quoting Marcucci, 299 F.3d at 1159).
Moreover,
terms
the
singular
“purpose”
and
“task,”
do
not
“undermine the grand jury’s purpose and function” because the
Ciambrone, 601 F.2d 616, 629 (2d Cir. 1979) (Friendly, J., dissenting),” does not undermine this analysis. In Vasquez, the Supreme Court reversed an African-American’s murder conviction because, even though he received a fair trial, he had been indicted by a grand jury from which African-Americans had been excluded, 474 U.S. at 262. The constitutionality of the model grand jury instruction was not at issue, and the statement merely acknowledges the reality that grand juries sometimes nullify; it does not create any right to a nullification instruction. 23
It is well established that when a jury has no sentencing function, it should be instructed not to consider punishment. Shannon v. United States, 512 U.S. 573, 579 (1994). -48-
instruction also “remind[s] the grand jury of its independence from the federal government” by stating that it has “extensive powers” and “in a very real senses stand[s] between the government and the accused] and leaves room for it to refuse to indict.” NavarroVargas, 408 F.3d at 1206. As for the “candor, honesty, and good faith” instruction, it “balance[s] the praise for the government’s attorney by informing the grand jurors that some have criticized the grand jury as a ‘mere rubber stamp’ to the prosecution and remind[s] them that the grand jury is ‘independent of the United States Attorney[.]’” at 1207.
Id.
Moreover, it “is not vouching for the prosecutor, but is
closer to advising the grand jury of the presumption of regularity and good faith that the branches of government ordinarily afford each other.”
Id.
Read as a whole, the instruction “surely does
not threaten the constitutional relationship between the prosecutor and grand jury.”
Id. at 1207-08.
Defendant has certainly not established that any portion of the
model
grand
collectively,
is
jury
charge,
unconstitutional,
considered and
has
individually not
offered
or any
persuasive reason to distinguish the Ninth and Eleventh Circuit’s rejection of his arguments.24
24
The withdrawn and dissenting Ninth Circuit opinions defendant relies upon, Grand Jury Memorandum at 9-16, are fully answered by the majority opinions, and defendant cites no other opinion concluding that the model charge is unconstitutional. -49-
Defendant has also made absolutely no showing that he was prejudiced by the court’s charge, and asks that prejudice be presumed.
However, “as a general matter, a district court may not
dismiss an indictment for errors in grand jury proceedings unless such errors prejudiced the defendants.”
Bank of Nova Scotia v.
United States, 487 U.S. 250, 254 (1988); id. at 256 (“[D]ismissal of the indictment is appropriate only if it is established that the violations substantially influenced the grand jury's decision to indict, or if there is grave doubt that the decision to indict was free from substantial influence of such violations.”) (citations and quotation marks omitted).
The instructions in question do not
amount to structural defects for which prejudice is presumed.
See
id. at 256-57; see also Vasquez v. Hillery, 474 U.S. 254, 261, 263-64 (1986) (exclusion of blacks from service as grand jurors undermines structural integrity of criminal tribunal and is not amenable to harmless error review); Ballard v. United States, 329 U.S. 187, 189-90 (1946) (exclusion of women from grand jury was error requiring dismissal of indictment). Given the fact that the model charge is not unconstitutional, and defendant has made no showing of prejudice, his motion should be denied. E.
The Forfeiture Allegation Should Not be Stricken. Defendant moves to strike the forfeiture allegation on the
ground that it “fails to identify the specific property that the
-50-
government believes is subject to forfeiture.”
Memorandum in
Support of Motion to Strike the Forfeiture Allegations (“Forfeiture Memorandum”) at 1. Recognizing that this contention is contrary to Second Circuit law, id. at 2, defendant asks this Court to follow what
he
contends
is
the
law
in
other
circuits.
Forfeiture
Memorandum at 2-3. In the Second Circuit, allegations which track the language of the applicable forfeiture statute are sufficient. United States v. Grammatikos, 633 F.2d 1013, 1024 (2d Cir. 1980); United States v. Rigas, 281 F. Supp. 2d 660, 672 (S.D.N.Y. 2003); see also United States
v.
Peters,
2009
WL
763384,
at
*4
(W.D.N.Y.
2009)
(“Indictments containing no more than a tracking of language in the applicable forfeiture statutes are therefore sufficient.”).
In
Grammatikos, the Court held that “[t]he plain language of Rule 7(c)(2) requires only that the extent of the interest or property subject
to
forfeiture
“grammatically require
the
forfeiture.”
be
implausible” government
to
alleged,” an
and
noted
interpretation
allege
the
that of
“property
the
it
found
Rule
to
subject
to
633 F.3d at 1024.
Here, the government has alleged, in the words of the statute, that defendant shall forfeit “his interest in any and all property, real or personal, which constitutes or is derived from proceeds traceable to” the violations alleged in Counts 1-8, to include a “money judgment representing the total dollar amount derived from
-51-
said violations.”
Indictment ¶ 68.
In accordance with Fed. R.
Crim. P. 32.2(b)(1), the government here seeks a “personal money judgment,” not “forfeiture of specific property.25
Such an in
personam judgment is properly sought pursuant to the forfeiture statute, see United States v. Vampire Nation, 451 F.3d 189, 198 (3d Cir. 2006) (district court properly entered in personam forfeiture judgment against defendant for proceeds of mail fraud); accord Jennings, 487 F.3d at 585, even for proceeds obtained before the forfeiture statute was enacted in August 2000.
Id. at 583, 585-86
(in scheme to deprive Minnesota of legislator’s honest services, forfeiture of “scheme proceeds that benefitted him personally” did not violate Ex Post Facto clause even though statute authorizing such forfeiture became effective in August 2000). To
the
extent
that
cases
from
other
circuits
cited
by
defendant hold, contrary to Grammatikos, that when the government is seeking to forfeit specific property it must specify such property in the indictment, those cases are inapplicable here because the government is seeking only a personal money judgment. Moreover, two of the cases cited by defendant hold that where (as here) the government is seeking substitute assets, such property
25
After a defendant has been found guilty, Fed. R. Crim. P. 32.2(b)(1) directs the Court to “determine what property is subject to forfeiture. If the government seeks forfeiture of specific property, the court must determine whether the government has established the requisite nexus between the property and the offense. If the government seeks a personal money judgment, the court must determine the amount of money that the defendant will be ordered to pay.” -52-
need not be listed in the indictment.
United States v. Parrett,
530 F.3d 422, 426 n. 3 (6th Cir. 2008); United States v. Hatcher, 323 F.3d 666, 673 (8th Cir. 2003) (indictment need not “specify what property will be sought as substitute assets”). Because the government need not “identify specific property” that it believes is “subject to forfeiture,” defendant’s motion to strike the forfeiture allegation should be denied. F.
None of the Language in the Indictment is Surplusage. Defendant
asks
the
Court
to
strike
as
surplusage
all
references to SEC Rule 206-(4)-3, 17 C.F.R. § 275.206(4)-3(a)(2), as well as the phrases Indictment
¶¶
20,
“dishonest services” and “sham invoice,”
43.26
These
references,
which
are
neither
inflammatory nor prejudicial, are all relevant to the charged crimes and should therefore not be stricken. 1.
Allegations Regarding SEC Rule 206-(4)-3 are Relevant Evidence Regarding Defendant’s Intent and Motive and As Background.
Defendant contends that SEC Rule 206-(4)-3 is not relevant because the rule imposes obligations on investment advisers, not solicitors.
Surplusage Memorandum at 8.
This argument relies on
mistaken assumptions of fact and law.
26
For the reasons discussed supra at 24-31, the statute of limitations does not bar the admission of evidence regarding conduct which occurred before June 30, 2003, and those relevant allegations should not be stricken as surplusage. -53-
Contrary to defendant’s assumption regarding the facts of this case, the government will offer evidence to show that defendant was aware of the rule (which he discussed with others) and that he had a contractual obligation to comply with it.
Evidence will also be
offered to show that defendant took actions regarding compliance with and/or avoidance of the rule in connection with the scheme while soliciting union officials. The rule is therefore admissible on the issue of defendant’s intent; see United States v. Nappy, 1995 WL 702363, at *2 (S.D.N.Y. 1995) (refusing to strike language regarding a Securities and Exchange Commission bar as surplusage because “[i]f, as the government contends . . . the proof will show that defendant concealed the . . . order as an integral part of the alleged schemes to defraud, then the bar order is relevant”); see also United States v. Parker, 364 F.3d 934, 942 (8th Cir. 2004) (finding testimony regarding scope and substance of FTC franchise rule was relevant to intent to deceive in mail fraud prosecution where there was evidence that defendant’s employer was subject to FTC
franchise
rule,
and
defendant,
who
knew
he
was
selling
franchises, was aware of the rule’s obligations); United States v. Parks, 68 F.3d 860, 866 (5th Cir. 1995) (“Evidence of violations of civil banking regulations cannot be used to establish criminal conduct . . . [but] may, however be admitted for the limited purpose of showing . . . motive or intent to commit the crime charged.”) (internal citations omitted), as well as motive and
-54-
background, see supra at 32-33. Defendant’s legal analysis – that the rule’s obligations were imposed solely on Wright, not defendant –
is also unsound because
it ignores accessorial liability principles.
Any person, even a
solicitor, who aids, abets, counsels, commands, procures, or causes a
criminal
violation
of
the
rule
has
the
same
criminal
responsibility as a principal even though he himself lacks the legal capacity to commit the offense.
See United States v.
Tannenbaum, 934 F.2d 8, 14 (2d Cir. 1991) (“[t]he inability to commit the substantive offense is immaterial.
If the defendant
‘willfully causes’ someone who has the legal capacity to commit the substantive offense, the defendant may be convicted under § 2(b); if the defendant ‘aids and abets’ the commission of the substantive offense by another who possesses the legal capacity to commit the substantive crime, the defendant may be convicted under § 2(a).”); see also United States v. Ozbay, 2007 WL 656049, at *3 (N.D.N.Y. 2007) (“Aiding and abetting, or causing or inducing another to commit a crime must be determined by one’s overt conduct, acts and statements; although it is not necessary that the acts alleged to have
constituted
aiding
and
abetting
be
criminal
in
and
of
themselves.”) (citation omitted). Defendant’s contention that references to the rule should be stricken because the rule’s obligations did not apply to him should therefore be rejected.
-55-
2.
The Phrases “Dishonest Services” and “Sham Invoice” are Accurate Descriptions of Relevant Evidence.
Defendant also contends that both the phrases “dishonest services,”
Indictment ¶ 20, and “sham invoice,” Indictment ¶ 43,
should be stricken, but offers no convincing reason why they are clearly irrelevant and inflammatory and prejudicial.
Both phrases
accurately describe evidence the government will present and are therefore relevant. The
term
“dishonest
services”
is
merely
an
alternative
statement of defendant’s alleged criminal conduct – his deprivation of the citizens of their right to his honest services – which is grounded in honest services case law.
See United States v. Royer,
549 F.3d 886, 900 n. 14 (2d Cir. 2008) (“Although [defendant] contends that the Government failed to show any detriment to his subscribers, this is plainly untrue, since they paid him $200-$600 for his honest services and received dishonest services instead.”) (emphasis added), petition for cert. filed, (U.S. May 12, 2009) (No. 08-10357); Brumley, 116 F.3d at 735 (“A sitting state official with adjudicatory authority who accepts payments from lawyers practicing in front of him and simultaneously acts for those lawyers in his official capacity contrary to his state-law duty has provided dishonest services.”) (emphasis added); United States v. Proffitt, 2008 WL 2225734, at *3 (W.D. Mo. 2008) (“While defendant contends that there is no allegation of dishonest services in this
-56-
case, that is clearly not the case.”) (emphasis added).
Defendant
has offered no explanation of how the phrase is clearly irrelevant and
his
conclusory
inflammatory”
cannot
assertion be
a
that
grounds
it
for
is
“superfluous
concluding
that
and
it
is
surplusage. As for the word “sham,” it is defined as “[s]omething that is not what it seems; a counterfeit.” Black’s Law Dictionary (8th ed. 2004).
The government will offer evidence at trial to show that
after defendant received a $15,000 check from Fassler in 1997, he prepared an invoice to create the false appearance that the check was a payment for work when, in fact, no legitimate work was performed.
Under these circumstances, use of the word “sham”
succinctly conveys the fact that the invoice was “not genuine,” and helps to explain why defendant’s conduct was illegal.
See United
States v. Ferguson, 478 F. Supp. 2d 220, 235 (D. Conn. 2007) (refusing to strike “phony,” “fake,” and “sham”); United States v. Stein, 429 F.Supp. 2d 633, 647 (S.D.N.Y. 2006) (refusing to strike “tax haven,” “phony,” and “concoct”); United States v. Sciandra, 529 F. Supp. 320, 322 (S.D.N.Y. 1982) (refusing to strike “sham” where
the
court
found
the
“government’s
argument
that
such
descriptions are not only relevant but are, in fact, the gist of the case . . . entirely convincing”). stricken.
-57-
It should therefore not be
3.
Defendant’s Motion To Strike Surplusage Should Be Denied For the Independent Reason That He Has Failed To Show That the Allegations Are Inflammatory and Prejudicial.
In addition to being relevant, defendant has failed to show that any of the allegations he has moved to strike are inflammatory and prejudicial.
See Stein, 429 F. Supp. 2d at 647 (defendants
failed to show how references to personal wealth and description of one defendant as leader was sufficiently prejudicial to warrant relief);
United
States
v.
Heatley,
994
F.
Supp.
483,
489-90
(S.D.N.Y. 1998) (nicknames not prejudicial and inflammatory and need not be stricken).
Defendant’s conclusory argument that
allegations regarding defendant’s receipt of $3.1 million during the scheme are prejudicial and inflammatory is not persuasive. Defendant does not move to strike references to the $1.5 million that he received after June 30, 2003, and he does not explain why $1.5 million is not prejudicial and inflammatory, but $3.1 million is.
As to the SEC rule, this Court’s instructions can be expected
to clear up any possible confusion.
Finally, defendant has failed
to show how the terms “dishonest services” and “sham” invoice are anything more than permissible descriptions of his conduct or how their use is in any way prejudicial and inflammatory.
His motion
to strike portions of the Indictment as surplusage should be denied.
-58-
G.
A Bill of Particulars is Not Required Because the Indictment is Detailed and the Discovery Includes “Documents of Particular Relevance.” Despite the detailed allegations in the Indictment and the
extensive discovery which has been provided, defendant, through 38 questions,27 seeks particulars regarding various allegations.
For
example, defendant contends that the Indictment fails “to identify any of the ‘persons’ who Mr. Bruno allegedly contacted,” and “to specify what those interests were and when they were placed before the Legislature and New York State agencies.” Support
of
Motion
Memorandum”) at 4. perceived
ability,”
for
a
Bill
of
Particulars
Memorandum in (“Particulars
He also asserts that the phrases “reasonably “dishonest
services,”
and
“discretionary
official action” require explanation. Id. at 4. Defendant has not established that a bill of particulars is necessary to prepare his defense, and his motion should therefore be denied. “The function of a bill of particulars is to provide defendant with information about the details of the charge against him if
27
Defendant’s questions resemble interrogatories in a civil case, and this Court should “not order the Government to ‘answer a set of detailed interrogatories in the guise of a bill of particulars.’” United States v. Grasso, 173 F.Supp. 2d 353, 366 (E.D. Pa. 2001) (quoting United States v. Kenny, 462 F.2d 1205, 1212 (3d Cir. 1972)); see also United States v. Gross, 2007 WL 1556638, at *1 (E.D. Mich. 2007) (“This Court may, in its sound discretion, ‘decline[ ] to require the Government to answer a set of detailed interrogatories in the guise of a bill of particulars’ especially if opportunity for liberal discovery exists.”) (quoting Kenny). -59-
this is necessary to the preparation of his defense and to avoid prejudicial surprise at trial,” and one “should be required only where the charges of the indictment are so general that they do not advise the defendant of the specific acts of which he is accused.” United States v. Torres, 901 F.2d 205, 234 (2d Cir. 1990) (citation and quotation marks omitted).
The test “is not whether the
information would be useful to the defense, but rather whether it is necessary.” United States v. Chalmers, 410 F. Supp. 2d 278, 286 (S.D.N.Y. 2006).
“Generally, if the information sought by the
defendant is provided in the indictment or in some acceptable alternate form, no bill of particulars is required.” United States v. Bortnovsky, 820 F.2d 572, 574 (2d Cir. 1987); see also United States
v.
Theriault,
2007
WL
4377781,
at
*1
(N.D.N.Y.
2007)
(“extensive discovery disclosed by the government together with supplemental oral and written disclosure can obviate the need for a bill of particulars”) (citation omitted).
“Acquisition of
evidentiary detail is not a function of a bill of particulars,” Torres, 901 F.2d at 234. Here,
the
detailed
allegations
in
the
Indictment
advise
defendant of the specific acts with which he is charged.
In
addition to the detailed allegations in the Indictment, e.g. Indictment ¶ 22, the discovery provided by the government provides defendant
with
even
more
detail
regarding
the
allegations.
Although the government has provided defendant with virtually all
-60-
documents which it obtained during the course of the investigation (including, where available, in electronic format), the government has not “simply unload[ed] a pile of documents on [defendant] with the expectation that he will somehow be able to decipher what the government will attempt to prove at trial,” Particulars Memorandum at 5, because the government has also provided defendant with “documents of particular relevance.”
The “documents of particular
relevance,”
on
which
were
produced
February
6,
2009
and
supplemented on April 29, 2009 in chronological order with certain financial records and official acts documents separately organized, are the documents the government views as most relevant, and from which the government anticipates that its trial exhibits will be selected.
The government will continue to add documents to the
category of “documents of particular relevance” if others are identified. Examples particular
of
information
relevance”
contained
include:
(1)
in
names
the of
“documents
union
of
officials
defendant solicited in letters, memoranda, and messages from the Wright
employee
who
worked
directly
with
defendant
and
who
identified labor union officials for defendant to contact; (2) interests
pursued
before
agencies
by
persons
the
the
Legislature
and
entities
and
New
defendant
York
State
solicited
identified in memoranda prepared by Senate staffers and lobbyists; and (3) official actions taken by defendant reflected in Senate
-61-
majority initiative forms signed by defendant directing money to particular unions or entities, spreadsheets tracking authorization and spending, and memoranda and notes setting forth or describing actions taken by defendant. Given the fact that the government has produced virtually all of the documents which it obtained during the course of this investigation and has also provided defendant with “documents of particular relevance,” which it will supplement with any additional anticipated trial exhibits as it prepares for trial, and the government has filed its jury instructions, a bill of particulars is unnecessary.
See Chalmers, 410 F. Supp. 2d at 285 (“defendants
have or will have sufficient information to defend against these charges” where “the government stated that it planned to provide the defendants with a subset of documents, culled out from the voluminous records, that it believes support the charges and may be used in its case-in-chief” ); see also Ferguson, 478 F. Supp. 2d at 226-27 (rejecting bill of particulars motion where government identified “hot documents” it intended to use in its case-in-chief and also produced electronically searchable databases).28
28
Although defendant has asked for explanations of the term “dishonest services” and other phrases used in the indictment, their meanings are clear from the case law, and a bill of particulars defining those terms is unnecessary. -62-
III.
Conclusion
For the above reasons, defendant’s motions should be denied. Dated: May 22, 2009
Respectfully submitted, ANDREW T. BAXTER United States Attorney
By: /s/ Elizabeth C. Coombe Elizabeth C. Coombe William C. Pericak Assistant U.S. Attorneys
-63-
Related Documents
Bruno Government Motion To Uphold
June 2020 6
Government Motion
June 2020 5
Davenport Government Opposition To Motion
May 2020 8
Bruno Trial Brief Government
June 2020 17
Bruno Motion To Bar Evidence Amend Indictment
June 2020 10
Bruno
November 2019 27More Documents from ""
Wright Retainer 1996 (gc-15)
June 2020 0
Gn-20 - Local 773 Initiative Form 2007-08
June 2020 0
Gj-08 - Howard Pataki Letter 0302
June 2020 1
Ge-20 - Pace Board Meeting Minutes 0401
June 2020 1