United States v. Gerrans

477 F.Supp.3d 1035

UNITED STATES of America, Plaintiff,

v.Lawrence J. GERRANS, Defendant.

Case No. 18-cr-00310-EMC-1

United States District Court, N.D. California.

Signed August 7, 2020

Robin L. Harris, Chris Kaltsas, David Countryman, Lloyd A. Farnham, United States Attorney's Office, San Francisco, CA, for Plaintiff.

Brian H. Getz, Law Offices of Brian H. Getz, San Francisco, CA, Samuel Youngs Edgerton, III, Freeman Mathis and Gary LLP, Hermosa Beach, CA, Shawn Halbert, Law Offices of Shawn Halbert, Lawrence Dale Murray, Murray & Associates, San Francisco, CA, Abigail R. Wolf, Theresa A. Kristovich, Kabat Chapman and Ozmer LLP, Los Angeles, CA, Eric Russell Krebs, Law Offices of Eric R. Krebs, Palo Alto, CA, for Defendant.

ORDER DENYING DEFENDANT'S MOTION FOR ACQUITTAL, DENYING DEFENDANT'S MOTION FOR NEW TRIAL, DENYING DEFENDANT'S MOTION TO DISMISS, AND DENYING DEFENDANT'S MOTION TO STRIKE

Docket Nos. 234, 235, 247, 258

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

On July 12, 2018, a federal grand jury returned an indictment charging Lawrence Gerrans ("Mr. Gerrans") with wire fraud ( 18 U.S.C. § 1343 ) and money laundering ( 18 U.S.C. § 1957 ). See Docket No. 1. On August 27, 20219, a second superseding indictment was returned by the grand jury, which charged Mr. Gerrans with 18 U.S.C. § 1343 (wire fraud), 18 U.S.C. § 1957 (money laundering), 18 U.S.C. § 1001(a)(3) (false statement), 18 U.S.C. § 401(3) (contempt), and 18 U.S.C. § 1512(b)(1) (witness tampering). See Docket No. 57. All of the charges stemmed from Mr. Gerrans's conduct as President and CEO of Sanovas Inc. ("Sanovas"), a medical and surgical device company. Id. On January 29, 2020, after a jury trial, which began on January 13, 2020 and concluded on January 29, 2020, the jury returned a verdict which found Mr. Gerrans guilty of all charges. See Docket No. 144. On May 27, 2020, Mr. Gerrans filed a Motion for Judgment NOV and a Motion for New Trial. See Docket Nos. 234, 235. On June 12, 2020, Mr. Gerrans filed a Motion to Dismiss for Improper Government Conduct. See Docket No. 247. On June 12, 2020, Mr. Gerrans filed a Motion to Strike the United States’ Objection to Reply Evidence. See Docket No. 258. A hearing was held on these motions on July 15, 2020, see Docket No. 264, prior to sentencing, which is currently scheduled for September 16, 2020. See Docket No. 284.

II. BACKGROUND

A. Factual Background

The Court and the parties are well acquainted with the factual allegations in this case. Thus, they are set forth here only in brief. Defendant, Lawrence Gerrans, was charged with taking millions of dollars from Sanovas, a medical device start-up company, which he co-founded. He was alleged to have billed the company for personal expenses and was accused of taking millions of dollars from Sanovas by fraudulent invoices and book entries, using shell entities, and lying to the board of directors. The money was taken to purchase a multi-million-dollar home, extravagant jewelry and home furnishings, vacations, and expensive cars. Mr. Gerrans was subsequently interviewed by the FBI about the allegations in this case; he made false statements and provided false documents related to his financial dealings involving Sanovas in an attempt to cover up his crimes. After he was indicted, while released on bond, Mr. Gerrans violated the terms of the bond by intimidating, harassing, and improperly communicating with his brother, Chris Gerrans, who was also the subject of a related FBI investigation.

The criminal counts, as described by the Defendant, were as follows:

The indictment alleged that Mr. Gerrans committed a scheme and artifice to defraud his own company of company funds. Counts 1 through 3 alleged three wire communications transferring a total of $580,000 that were used to buy a family home; Counts 4 and 5 respectively alleged transfers of $32,395.77 and $12,5000 for personal expenses using Sanovas funds to which he was not entitled. Count 6 alleged that Mr. Gerrans committed money laundering by transferring $2,303,966.42 from Hartford [B]ank to Stewart [T]itle for the purchase of a family home. Counts 7 and 8 alleged that Mr. Gerrans violated Title 18 Section 1001(3) by making false statements to the FBI concerning false invoices from Halo Management Group to Mr. Gerrans and his wife for the time period January through March 2010. Count 9 alleged another violation of Section 1001(3) based on the alleged submission to the FBI of a false "Secured Promissory Note" from Mr. Gerrans and his wife to Hartford Legend Capital on March 17, 2015. Counts 10 through 12 alleged that from July 2018 through August 13, 2019, Mr. Gerrans committed contempt, witness tampering and obstruction of justice arising out of his contact with his brother, Chris Gerrans.

Defendant's Motion for Judgment NOV ("JNOV Mot.") at 1, Docket No. 234.

B. Procedural Background

On July 12, 2018, a federal grand jury returned an indictment that charged Mr. Gerrans with wire fraud ( 18 U.S.C. § 1343 ) and money laundering ( 18 U.S.C. § 1957 ). See Docket No. 1. Mr. Gerrans appeared on July 23, 2018 and was released on bond, subject to conditions set by Judge James. See Docket Nos. 4, 5. On September 18, 2018, Mr. Gerrans's original counsel filed a motion to withdraw as counsel (because no defense coverage was available through Sanovas's insurance), see Docket No. 16, and on October 25, 2018, Brian H. Getz entered his appearance, see Docket No. 20. On November 8, 2018, a superseding indictment was filed. See Docket No. 22. On August 12, 2019, Mr. Gerrans filed a Motion to Dismiss, see Docket No. 42, but that motion was taken off calendar at Mr. Gerrans's request on August 21, 2019. See Docket No. 51. In the intervening period, Mr. Gerrans was remanded into custody (for violating the terms of his conditional release) on August 15, 2019. See Docket No. 46. A second superseding indictment was filed on August 27, 2019. See Docket No. 57.

A jury trial commenced on January 13, 2020, and the case was given to the jury on January 29, 2020. See Docket No. 143. That same day, the jury rendered a verdict, finding Mr. Gerrans guilty on all counts. See Docket No. 144. Sentencing was scheduled for May 20, 2020. See Docket No. 143. On March 20, 2020, Shawn Halbert filed a Notice of Substitution of Attorney. See Docket No. 162. On April 11, 2020, the Court continued sentencing from May 20, 2020 to June 25, 2020. See Docket No. 203. On April 23, 2020, the Court issued a clerk's notice directing Defendant to file any post-trial motions by May 27, 2020. See Docket No. 212. On May 15, 2020, the Court continued sentencing again to August 18, 2020. See Docket No. 225. On May 27, 2020, it again continued the deadline to submit post-trial motions to July 9, 2020. See Docket No. 232. On May 27, 2020, Mr. Gerrans filed two of the motions currently before the Court: his Motion for Judgment NOV, Docket No. 234, and his Motion for a New Trial, Docket No. 235.

On June 4, 2020, the government filed a motion for forfeiture of property. See Docket No. 243. On June 12, 2020, Mr. Gerrans filed a Motion to Dismiss for Improper Government Conduct. See Docket No. 247. After briefing on these motions completed, the government objected to declarations and evidence that Mr. Gerrans attached to his Reply in support of his Motion to Dismiss. See Docket No. 256. Mr. Gerrans moved to strike that response. See Docket No. 258.

Finally, in light of the fact that the government raised issues of timeliness in its opposition to Mr. Gerrans's various motions (and therefore the government had no opportunity to respond to the responsive arguments Mr. Gerrans presented in his replies), the Court permitted the government to file a sur-reply addressing Mr. Gerrans's arguments related to timeliness. See Docket No. 257. The government filed that response on July 10, 2020. See Docket No. 259.

III. TIMELINESS

Before reaching the merits of any of Mr. Gerrans's motions, the Court addresses the issue of timeliness. Federal Rule of Criminal Procedure 29 provides:

"A defendant may move for a judgment of acquittal, or renew such a motion, within 14 days after a guilty verdict or after the court discharges the jury, whichever is later." Fed. R. Crim. P. 29(a). Likewise, Federal Rule of Criminal Procedure 33 requires that any motion for a new trial not based on newly discovered evidence "must be filed within 14 days after the verdict or finding of guilty." Fed. R. Crim. P. 33(b). As is relevant here, ineffective assistance of counsel is not considered "newly discovered evidence." United States v. Allen , 153 F.3d 1037, 1045 (9th Cir. 1998) (quoting United States v. Pirro , 104 F.3d 297, 299 (9th Cir. 1997) ) ("We have rejected the use of a Rule 33 motion for new trial based on ‘newly discovered evidence’ involving the ineffective assistance of counsel."). Mr. Gerrans does not identify a specific rule pursuant to which his Motion to Dismiss Based on Prosecutorial Misconduct is brought; however, he does request—should the Court consider a new trial as a remedy for the alleged misconduct—that it look to the arguments Mr. Gerrans advanced in support of the timeliness of his Rule 33 motion. Reply in Support of Defendant's Motion to Dismiss for Prosecutorial Misconduct ("MTD Reply") at 2 n.2, Docket No. 253.

Here, the jury returned a verdict convicting Mr. Gerrans on all counts on January 29, 2020. See Docket No. 144. After the verdict was returned, the Court discussed post-trial motions with the parties. See Transcript of Proceedings from January 29, 2020 ("Jan. 29 Transcript") at 163, Docket No. 180. Counsel for Mr. Gerrans indicated that if there were any post-trial motions that he believed should be heard in advance of sentencing, he would contact the Clerk of the Court. Id. As the government notes, "[t]here was no discussion of extending the 14-day time limit under Rule 29 for renewing the motion, and the Court did not set a schedule that would have...