United States v. Silver, 15–CR–93 (VEC).

117 F.Supp.3d 461

UNITED STATES of America,

v.Sheldon SILVER, Defendant.

No. 15–CR–93 (VEC).

United States District Court, S.D. New York.

Signed July 24, 2015.

Andrew Daniel Goldstein, Carrie Heather Cohen, Howard Seth Master, James M. McDonald, United States Attorney's Office, New York, NY, for United States of America.

Joel Cohen, Stroock & Stroock & Lavan LLP, Joel Barry Rudin, Law Offices of Joel B. Rudin, Justin Vaun Shur, Steven Francis Molo, Molo Lamken, LLP, New York, NY, Robert Kelsey Kry, Molo Lamken LLP (NYC), Washington, DC, for Defendant.

MEMORANDUM OPINION & ORDER

VALERIE CAPRONI, District Judge.

In his third attempt to have the charges against him dismissed,¹ Defendant Sheldon Silver argues that the Government has failed adequately to allege that he committed the crimes with which he is charged. Specifically, Silver contends that the Superseding Indictment is deficient because (1) Silver's alleged conduct amounts, at most, to coercion, rather than to Hobbs Act extortion; (2) the fraudulent schemes in which he allegedly engaged may have constituted self-dealing or ethical conflicts but did not include "bribes or kickbacks" as is required for honest services fraud, see Skilling v. United States, 561 U.S. 358, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010) ; (3) the Government has not specifically alleged the telephone calls and emails on which the mail and wire fraud charges are based; and (4) the federal money laundering statute under which Silver is charged is unconstitutionally vague. None of Silver's arguments is persuasive. Defendant's Motion is DENIED.

BACKGROUND

On April 23, 2015, the Government filed a Superseding Indictment ("SI") charging Silver with two counts of honest services mail fraud, 18 U.S.C. §§ 1341, 1346 ; two counts of honest services wire fraud, 18 U.S.C. §§ 1343, 1346 ; two counts of extortion under color of official right, 18 U.S.C. § 1951 ; and money laundering, 18 U.S.C. § 1957. SI ¶¶ 33–45. The Superseding Indictment alleges three schemes that are relevant to this Motion: the "asbestos scheme," the "real estate scheme," and the "money laundering scheme."

In the asbestos scheme, Silver (in his capacity as Speaker of the New York State Assembly) allegedly disbursed state funds to a research center with which a physician who specializes in the treatment of mesothelioma ("Doctor–1") was affiliated. Id. ¶¶ 16–18, 23.² In exchange, Doctor–1 transmitted his patients' information (with their consent) to Silver, who passed the information along to Weitz & Luxenberg, P.C., a law firm with which Silver was affiliated. Id. ¶¶ 8(b), 20–23. Many of Doctor–1's patients retained Weitz & Luxenberg, and the firm paid Silver more than $3 million in referral fees. Id. ¶ 24.

In the real estate scheme, Silver allegedly used his position as Speaker of the New York State Assembly to steer two real estate developers ("the Developers") towards a particular law firm (the "Real Estate Law Firm") in which Silver's former counsel is a partner. Id. ¶¶ 10–13. In exchange, Silver regularly met with lobbyists and representatives from the Developers and "supported legislative proposals favorable to [the Developers]." Id. ¶ 13(d). The Developers had not previously engaged the Real Estate Law Firm, but both engaged the firm for their tax certiorari business at Silver's urging. Id. ¶ 13(a).³ The Real Estate Law Firm, in turn, paid Silver approximately $700,000, representing a percentage of the fees it obtained from the Developers. Id. ¶ 14.

Finally, in the money laundering scheme, the Superseding Indictment charges that Silver used his relationship with an investor ("Investor–1") "to distribute his crime proceeds across numerous high-yield investment vehicles not available to the general public," typically featuring high returns with minimal risk. Id. ¶¶ 29–30. Beginning around 2006, Silver transferred approximately $642,000 from his bank account into one such investment ("Investment Vehicle–1"); these funds had grown to over $1.4 million by January 2015. Id. ¶ 32. In 2011, when it became apparent that a change in law would require Silver to disclose his assets to the public, Silver allegedly transferred more than $340,000 in Investment Vehicle–1 from his name into the name of a family member to avoid public disclosure of the full amount of his investment. Id.

DISCUSSION

A defendant seeking to challenge the sufficiency of an indictment on a motion to dismiss faces a high hurdle. "Pursuant to Federal Rule of Criminal Procedure 7, ‘the indictment or information must be a plain, concise, and definite written statement of the essential facts constituting the offense charged.’ " United States v. Vilar, 729 F.3d 62, 80 (2d Cir.2013) (quoting Fed.R.Crim.P. 7(c)(1) (alterations omitted)). "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.’ " United States v. Stringer, 730 F.3d 120, 124 (2d Cir.2013) (quoting Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974) ); see also United States v. Resendiz–Ponce, 549 U.S. 102, 108, 127 S.Ct. 782, 166 L.Ed.2d 591 (2007). " ‘Unless the government has made what can fairly be described as a full proffer of the evidence it intends to present at trial[,] the sufficiency of the evidence is not appropriately addressed on a pretrial motion to dismiss an indictment.’ " United States v. Perez, 575 F.3d 164, 166–67 (2d Cir.2009) (quoting United States v. Alfonso, 143 F.3d 772, 776–77 (2d Cir.1998) (alteration omitted)).

I. The Superseding Indictment Alleges that Silver Committed Hobbs Act Extortion

With the weight of case law against him, Silver nevertheless argues that the facts alleged in the Superseding Indictment do not constitute extortion under the Hobbs Act, 18 U.S.C. § 1951. The Hobbs Act defines extortion as "obtaining [ ] property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." 18 U.S.C. § 1951(b)(2). This statute has been clarified by two recent Supreme Court cases, Scheidler v. National Organization for Women, Inc., 537 U.S. 393, 123 S.Ct. 1057, 154 L.Ed.2d 991 (2003), and Sekhar v. United States, 570 U.S. ––––, 133 S.Ct. 2720, 186 L.Ed.2d 794 (2013). Although these decisions inform the Court's analysis and will shape the jury instructions that are given at trial, they do not lead to the conclusion that the Superseding Indictment is legally insufficient. Cf. Alfonso, 143 F.3d at 776–77.

The petitioners in Scheidler were abortion protestors found liable for civil racketeering based on jury findings that they had "use[d] or threaten[ed] to use force, violence, or fear to cause respondents ‘to give up’ property rights, namely, ‘a woman's right to seek medical services from a clinic, the right of the doctors, nurses or other clinic staff to perform their jobs, and the right of the clinics to provide medical services free from wrongful threats, violence, coercion and fear.’ " 537 U.S. at 400–01, 123 S.Ct. 1057 (quoting jury instructions). The Court held that Hobbs Act extortion, like the New York provision on which it was modeled, "retained the requirement that property must be ‘obtained.’ " Id. at 403, 123 S.Ct. 1057. Accordingly, even though intangible property rights could, consistent with Scheidler, be extorted, because the protesters never "obtained" the intangible rights that the clients, doctors, and clinic staff lost, the protestors did not commit Hobbs Act extortion.

The Supreme Court returned to the issue of the scope of conduct prohibited by the Hobbs Act in Sekhar, 570 U.S. ––––, 133 S.Ct. 2720. The defendant in Sekhar had threatened the General Counsel of the New York State Comptroller's Office that he would disclose embarrassing facts about the General Counsel unless he recommended that the Comptroller "approve" an investment by the New York Common Retirement Fund in the defendant's company. 570 U.S. at ––––, 133 S.Ct. at 2723. If the General Counsel had made such a recommendation, and if the Comptroller had followed the recommendation and approved the investment, the Common Retirement Fund would have been permitted to invest (but would not necessarily have invested) in the defendant's company. Id. Analogizing to a Pulitzer Prize Committee member's ability to recommend a recipient of that Prize, the Court acknowledged that the right to make such a recommendation "must be valuable. But the point relevant to the present case is that it cannot be transferred, so it cannot be the object of extortion under the statute." Id. at 2726 n. 5 (emphasis in original);⁴ see, e.g., United States v. Carlson, 787 F.3d 939, 944 (8th Cir.2015) (identifying the concern in Sekhar as the fact that defendant "had not actually sought to deprive and/or obtain transferable property ") (emphasis in original); Kerik v. Tacopina, 64 F.Supp.3d 542, 561 (S.D.N.Y.2014) (holding, after Sekhar, that a perpetrator could not "extort" the victims' "intangible right to publish an article about him" because it was not a " ‘transferable’ item of value").

A. The Asbestos Scheme

Silver argues that the asbestos scheme is analogous to the charged conduct in Sekhar, because what Silver obtained in exchange for his allegedly extortionate conduct was a mere recommendation, conveyed by Doctor–1 to his patients. Silver claims that Doctor–1's decision to refer his patients to Weitz & Luxenberg was not transferable property; even if such a recommendation could be "intangible property," it was clearly not "transferred" to Silver or to Weitz & Luxenberg.

Silver's argument addresses only one of the three ways that the events at issue could be described.⁵ If Silver's conduct led only to Doctor–1's recommending Weitz & Luxenberg to his patients, such a scenario would not constitute extortion, as...