United States v. Tavlin

1

United States of America, Plaintiff, v. Doron Tavlin (01) and David Gantman (03), Defendants.

No. 22-cr-134 (DWF/JFD)

United States District Court, D. Minnesota

May 16, 2023

ORDER

JOHN F. DOCHERTY, UNITED STATES MAGISTRATE JUDGE.

This case is before the undersigned United States Magistrate Judge on the nondispositive pretrial motions filed by the United States of America, Defendant Doron Tavlin, and Defendant David Gantman (Dkt. Nos. 21, 22, 69-77).^[1] The Court held a motions hearing on April 5, 2023. Assistant United States Attorneys Kimberly Svendsen and Matthew Ebert appeared on behalf of the United States; Matthew Forsgren and Caitlinrose Fisher, Esqs., appeared on behalf of Mr. Tavlin; and William Mauzy, Esq., appeared on behalf of Mr. Gantman. The case has been referred to the undersigned for resolution of pretrial matters pursuant to 28 U.S.C. § 636 and District of Minnesota Local Rule 72.1.

Most of the parties' motions may be ruled on summarily, and the Court has done so below, consistent with the discussions at the motions hearing. However, Mr. Tavlin's Motion for Discovery and Inspection, Mr. Tavlin's Motion to Compel the Government to Disclose Favorable Evidence, and Mr Gantman's Motion to Compel Disclosure of Brady Materials require some discussion.

I. Background

As part of his motion for discovery, Mr. Tavlin requests the production of all statements made by him, including statements solely in the possession of the SEC or its attorneys. (Def. Tavlin's Mot. Discovery at 1, Dkt. No 70.) In his motion for favorable evidence, Mr. Tavlin asks the Court to order the United States to produce any Brady and Giglio materials that are in the sole possession of the SEC. (Def. Tavlin's Mot. Compel Favorable Evid. at 3, Dkt. No. 71.) Mr. Tavlin argues that the discovery produced to date indicates that the U.S. Attorney's Office (“USAO”) and the SEC “have cooperated in this matter.” (Id.) One such example, according to Mr. Tavlin, is that the Indictment against him was filed just one week before the SEC filed a civil complaint with similar allegations.^[2] (Id.) Mr. Tavlin therefore asks the Court to direct the United States to review the files of the SEC to locate and disclose any additional exculpatory material. (Id.)

In Mr. Gantman's Brady motion, he seeks in part (1) information pertaining to codefendant Afshin Farahan's plea negotiations with the United States, including notes of statements and grand jury transcripts; (2) records of the purchase or sale of Mazor stock or other securities made by Mr. Farahan between 2012 and 2019; (3) Mr. Farahan's notes or recordings; (4) communications between Mr. Farahan, Mr. Tavlin, and Mr. Gantman; and (5) materials concerning the Financial Industry Regulatory Authority (“FINRA”) investigation described in paragraphs 14.n-14.q^[3] of the Indictment. (Def. Gantman's Brady Mot. at 3-4, Dkt. No. 74.)

The United States opposes Mr. Tavlin's and Mr. Gantman's requests to search the SEC's or FINRA's files for information or to produce materials in the sole possession of the SEC or FINRA, arguing that the SEC and FINRA conducted their own civil regulatory investigations and were not part of the criminal prosecution team. (Gov't Resp. at 4, 8, Dkt. No. 78.) The United States asserts that the USAO in Minneapolis, assisted by the FBI, conducted the criminal investigation of the alleged insider-trading conspiracy. (Id. at 11.) The United States acknowledges that the USAO obtained documents from the SEC, including documents from third parties and transcripts of depositions taken during the SEC's investigation. (Id.) The USAO also separately obtained documents via grand jury subpoenas and did not share or even discuss the documents with the SEC. (Id. at 11-12.)

The United States also obtained information from 10 interviews of individuals, two of which were attended by the SEC, but both of those interviews were of Mr. Farahan. (See id. at 12; Mot. Hr'g Tr. at 18, Dkt. No. 96.^[4]) The other eight interviews were conducted without the SEC's presence or knowledge. (Gov't Resp. at 12.)

Meanwhile, according to the United States, investigators in the SEC's regional office in Los Angeles, California, were conducting a separate civil investigation. (Id.) As part of that investigation, the SEC deposed Mr. Tavlin and Mr. Gantman. (Id.) The USAO did not participate in, attend, or consult with the SEC about the depositions, but the USAO did later obtain the deposition transcripts. (Id.) The USAO does not know if the SEC interviewed other witnesses. (Id.) The United States represents that the SEC was not involved in the criminal charging decision and that the USAO was not involved in commencing the civil proceeding. (Id. at 13.) The United States further represents that it has produced all information it has received from the SEC to the defense. (Id.)

As to the FINRA investigation, the United States explains that “FINRA is a national securities association registered with the SEC, which creates and enforces certain rules that govern the securities industry, including investigating whether certain transactions involve insider trading.” (Id. at 15.) FINRA provided documents to the SEC from its own investigation, and the SEC provided those documents to the USAO. (Id.) FINRA's investigation was complete before the documents were forwarded to the USAO, and there was no part of the FINRA investigation that was conducted jointly with the criminal investigation and no part of the criminal investigation that was conducted jointly with the FINRA investigation. (Id.)

At the hearing on the motions, Mr. Forsgren noted that the FBI approached Mr. Tavlin for an interview in January 2021, and within a week, the SEC contacted Mr. Tavlin with a subpoena. (Hr'g Tr. at 15.) Mr. Forsgren further emphasized that 97% of the document production by the United States bore the SEC's Bates numbers; that Mr. Farahan, “the Government's main witness in this case,” was jointly interviewed twice; and that the Indictment was unsealed on the same day the SEC emailed the civil complaint to Mr. Forsgren and asked him to accept service. (Id. at 17-18, 23.)

Ms. Svendsen responded at the hearing that the SEC had no knowledge of or involvement in Mr. Farahan's grand jury testimony, recorded conversations between Mr. Farahan and Mr. Tavlin, or the grand jury proceedings. (Id. at 33.) The AUSAs also added that the USAO did not confer with the SEC about the content of the Indictment, nor did the SEC confer with the USAO about the contents of the civil complaint, including providing a draft or advance copy, except for a single conversation between Mr. Ebert and SEC counsel. (Id. at 36-37.) During that conversation, SEC counsel previewed the forthcoming civil claims, but there was no back-and-forth exchange. (Id. at 38.)

Relevant to the Brady motions, the Court asked the United States to provide, in camera by April 19, 2023, all materials in the possession of the Department of Justice (including the U.S. Attorney's Office for the District of Minnesota, the Federal Bureau of Investigation, and other DOJ components) or the SEC relating to the two interviews of Mr. Farahan attended by the SEC, including, but not limited to, emails, records of phone calls, reports, and FBI 302s. The Court took the motions under advisement on April 19, 2023, after the materials were received. The Court will not describe the contents of the materials since they were provided in camera.

II. Discussion

“Criminal defendants do not have a general constitutional right to discovery.” United States v. Johnson, 228 F.3d 920, 924 (8th Cir. 2000). A defendant must usually identify “a statute, rule of criminal procedure, or other entitlement to obtain discovery from the government.” Id. One such rule is Federal Rule of Criminal Procedure 16(a)(1), which requires the United States to disclose, among other things, and upon the defendant's request, a defendant's oral, written, or recorded statement; and documents and objects within the United States' possession, custody, or control that are material to the defense, intended to be used in the government's case-in-chief, or from the defendant. Fed. R. Crim. P. 16(a)(1)(A), (B), (E). Under Brady v. Maryland, the United States must also “disclose any evidence favorable to the defendant . . . that is ‘material either to guilt or to punishment.'” United States v. Primm, 63 F.4th 1186, 1192 (8th Cir. 2023) (quoting Brady, 373 U.S. 83, 87 (1963)). The government's disclosure obligation includes evidence relevant to a witness's credibility. Giglio v. United States, 405 U.S. 150, 154-55 (1972). A prosecutor also “has a duty to learn of any favorable evidence known to the others acting on the government's behalf in the case.” Kyles v. Whitley, 514 U.S. 419, 437 (1995).

A. Materials Solely in the Possession of the SEC

“Where the USAO conducts a ‘joint investigation' with another state or federal agency, courts . . . have held that the prosecutor's duty extends to reviewing the materials in the possession of that other agency for Brady evidence.” United States v. Gupta, 848 F.Supp.2d 491, 493 (S.D.N.Y. 2012).^[5] “To determine whether a joint investigation has occurred, courts engage in a case-by-case analysis of the extent of interaction and cooperation between the two governmental agencies.” United States v. Bases, 549 F.Supp.3d 822, 825 (N.D. Ill. 2021) (cleaned up). A primary factor is the nature of cooperation, such as coordinating witness interviews and investigating the facts of the case. Id. Other factors include whether the SEC (or other agency): “(1) participated in the prosecution's witness interviews, (2) was involved in presenting the case to the grand jury, (3) reviewed documents gathered by or shared documents...