United States v. Neuman

UNITED STATES OF AMERICA, Plaintiff, v. MARK A. NEUMAN,TIMOTHY D. LARKIN, LANE D. LYONS, Defendants.

3:11-CR-00247-BR

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON

DATED: October 28, 2013

OPINION AND ORDER ON

POST-TRIAL MOTIONS

#401, #402, #403, and #404

S. AMANDA MARSHALL

United States Attorney

District of Oregon

SETH D. URAM

DONNA M. MADDUX

Assistant United States Attorneys

Attorneys for Plaintiff

JANET LEE HOFFMAN

CARRIE MENIKOFF

Janet Hoffman & Associates LLC

ROBERT R. CALO

Lane Powell, PC

Attorneys for Defendant Larkin

JOHN S. RANSOM

Ransom Blackman, LLP

MATTHEW A. SCHINDLER

Attorneys for Defendant Lyons

EMILY SIMON

TODD H. GROVER

Ward Grover, LLP

Attorneys for Defendant Neuman

BROWN, Judge.

This matter comes before the Court on the Motion (#401) in Arrest of Judgment as to Count Two filed by Defendants Mark A. Neuman, Timothy D. Larkin, and Lane D. Lyons; Defendants' Motions (#402, #404) for New Trial; and Defendant Larkin's Motion (#403) for New Trial. The Court concludes the record is sufficiently developed, and, therefore, oral argument would not be helpful in resolving these Motions. For the reasons that follow, the Court DENIES the Motions.

BACKGROUND

On June 22, 2011, Defendants were each charged with one count of Conspiracy to Commit Wire fraud in violation of 18 U.S.C. § 1349 and one count of Conspiracy to Commit Money Laundering in violation of 18 U.S.C. § 1956(h).

On July 3, 2013, at the conclusion of a 17-day trial, the jury found Defendants guilty of all conspiracy counts.

On July 17, 2013, Defendants filed their Motion (#401) to Arrest the Judgment as to Count Two and two Motions (#402, #404) for New Trial. Defendant Larkin also filed a separate Motion (#403) for New Trial asserting separate grounds from his co-Defendants. As noted, the Court concludes oral argument would not be helpful.

STANDARDS

I. Motion in Arrest of Judgment

Federal Rule of Criminal Procedure 34 provides: "Upon the defendant's motion or on its own, the court must arrest judgment if: (1) the indictment or information does not charge an offense; or (2) the court does not have jurisdiction of the charged offense." Fed. R. Crim. P. 34(a). Pursuant to Rule 34(b) a defendant must move for arrest of judgment within fourteen days from the time the court accepts a guilty verdict.

A court must decide a Rule 34 motion based on the indictment, the plea and the verdict rather than on the evidence. United States v. Sisson, 399 U.S. 267, 281 (1970)("a judgment can be arrested only on the basis of error appearing on the 'face of the record,' and not on the basis of proof offered at trial"). See also United States v. Guthrie, 814 F. Supp. 942, 944 (E.D. Wash. 1993)("A Rule 34 motion for arrest of judgment . . . must be decided on the record alone, that is, on the indictment, plea, and verdict.")(citations omitted).

II. Motion for New Trial

Federal Rule of Criminal Procedure 33(a) provides in pertinent part: "Upon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires." The defendant carries the burden tojustify the need for a new trial. The determination whether the defendant has satisfied that burden rests in the discretion of the court. United States v. Mack, 362 F.3d 597, 600 (9th Cir. 2004). If the court concludes the evidence is sufficient to sustain the verdict but a serious miscarriage of justice may have occurred, the court may grant the motion for a new trial. United States v. Kellington, 217 F.3d 1084, 1097 (9th Cir. 2000).

DISCUSSION

I. Defendants' Motion (#401) in Arrest of Judgment

On June 24, 2013, Defendant Neuman filed a Motion (#372) for Judgment of Acquittal joined by Defendants Larkin and Lyons in which they contended that conspiracy to commit money laundering is not an offense chargeable under 18 U.S.C. § 1956(h). Consistent with the arguments made in that Motion, Defendants now move for Arrest of Judgment pursuant to Rule 34 on the ground that conspiracy to commit money laundering is not "specified unlawful activity" under 18 U.S.C. § 1956(c)(7), and, therefore Count 2 fails to charge an offense. In Motion #372 Defendants argued because conspiracy to commit wire fraud is not "specified unlawful activity" as defined under 18 U.S.C. §§ 1956 and 1961, the government did not allege a chargeable offense in Count 2,and, therefore, they were entitled to a judgment of acquittal on Count 2.

The Court heard oral argument on the legal question presented in Motion #372 on June 24, 2013. On June 26, 2013, the Court issued an Order (#374) denying Motion #372.

Although Defendants acknowledge in their current Motion that they are asserting grounds identical to those previously raised in Motion #372, Defendants assert they have identified additional case law to support their position. The Court has considered Defendants' arguments again, reviewed the additional case law, and concludes Defendants have not established that an error was made.

Defendants do not cite any controlling authority for their proposition that conspiracy to commit mail or wire fraud cannot constitute "specified unlawful activity" under §§ 1956 or 1961 or that Count 2 fails to contain a chargeable offense. Moreover, Defendants ignore case law upholding convictions for conspiracy to commit wire fraud and conspiracy to commit money laundering. See, e.g., United States v. Kimbrew, 406 F.3d 1149, 1152 (9th Cir. 2005)(affirming conviction for conspiracy to commit money laundering). See also United States v. Hasson, 333 F.3d 1264, 1275 (11th Cir. 2003)(affirming convictions for conspiracy to commit wire fraud and conspiracy to commit money laundering);United States v. Abdulwahab, 715 F.3d 521, 532-33 (4th Cir. 2013)(reversing money laundering conviction but upholding convictions for conspiracy to commit money laundering and conspiracy to commit wire fraud).

In addition, Defendants overlook the fact that the government is not required to prove a predicate act under § 1956(h). See United States v. Martinelli, 454 F.3d 1300, 1312 (11th Cir. 2006)("It is by now abundantly clear that in a money laundering case (or in a money laundering conspiracy case), the defendant need not actually commit the alleged specified unlawful activity.").

Finally, the new cases upon which Defendants rely are readily distinguishable. Defendants cite cases that focus on interpretations specific to the RICO statute (18 U.S.C. § 1962(c, d)) that have been overruled or that contemplate theories that have been rejected by the Ninth Circuit. See, e.g., United States v. Weisman, 624 F.2d 1118, 1123-24 (2d Cir. 1980)(noting some subsections of § 1961 may serve as predicate acts of racketeering activity); United States v. Ruggiero, 726 F.2d 913, 919-20 (2d Cir. 1984), overruled by Salinas v. United States, 522 U.S. 52, 63 (1997)(citing 18 U.S.C. § 1962(d) and noting that conspiracies to violate substantive RICO provisions may be predicate acts). Compare R.E. Davis Chem. Corp. v. NalcoChem. Co., 757 F. Supp. 1499, 1510 (N.D. Ill. 1990)(recognizing conspiracy to commit wire fraud could not be a predicate act of racketeering activity under 18 U.S.C. § 1962(d)), and Allington v. Carpenter, 619 F. Supp. 474, 479 (C.D. Cal. 1985)(same), with United Energy Owners Comm., Inc. v. U.S. Energy Mgmt. Sys., 837 F.2d 356, 360 (9th Cir. 1988)(rejecting Allington's multiple criminal episode theory of pleading a pattern of racketeering activity under RICO).

In short, the Court has considered Defendants' arguments again and concludes they do not provide a basis to alter the Court's previous ruling or to grant the Motion in Arrest of Judgment. Thus, the Court denies Defendants' Motion (#401) in Arrest of Judgment as to Count Two.

II. Defendants' Motion (#402) for New Trial

Defendants move for a new trial on the grounds that (1) the Court erred by failing to instruct the jury as requested concerning Defendants' character and by improperly restricting Defendants' presentation of character evidence under Federal Rule of Evidence 404; (2) the Court erred by refusing to merge Count 2 with Count 1 pursuant to United States v. Santos and United States v. Van Alstyne and erroneously instructed the jury that "proceeds" were "gross receipts"; (3) the government failed to prove two separate conspiracies necessary to support convictionson Counts One and Two; (4) there was insufficient evidence to support the Court's instruction on deliberate ignorance; (5) the Court erroneously instructed the jury regarding the term "trust"; (6) the government's theory of fraud was legally flawed because Defendants did not have a duty to disclose; and (7) the Court erroneously admitted into evidence emails as business records under Federal Rule of Evidence 803(6).

A. Character Evidence

Defendants contend the Court erred by refusing to provide an instruction about Defendants' character evidence. In addition, Defendants argue the Court's evidentiary rulings during trial impermissibly limited the scope of their questions directed to their character witnesses. The Court disagrees.

A single jury instruction may not be judged in isolation, but must be viewed in the context of the overall charge. United States v. Powell, 955 F.2d 1206, 1210 (9th Cir. 1991). See also United States v. Harrison, 34 F.3d 886, 889 (9th Cir. 1994). The court has wide latitude in tailoring jury instructions as long as the instructions taken as a whole fairly and adequately guide the jury's deliberations and cover the issues presented. United States v. Peppers, 697 F.3d 1217, 1120 (9th Cir. 2012)(per curiam), cert. denied, 133 S. Ct. 1477 (2013). See also United States v. Moore, 109 F.3d 1456, 1465 (9th Cir. 1997)(en banc). Adistrict court's formulation of jury instructions is reviewed for abuse of discretion. Powell, 955 F.2d at 1210. "'Jury instructions, even if imperfect, are not a basis for overturning a conviction absent a showing that they prejudiced the defendant.'" United States v. Cherer, 513 F.3d 1150, 1155 (9th Cir. 2008)(...