United States v. Naegele

367 B.R. 15, 2007 U.S. Dist. LEXIS 28155, 2007 WL 1140117
District Court, District of Columbia·Decided April 18, 2007·No. Criminal No. 05-0151 (PLF)·Published·Cited by 1 cases

Opinion

OPINION AND ORDER

PAUL L. FRIEDMAN, District Judge.

This matter is before the Court on defendant’s motion to dismiss the indictment for misconduct by the prosecution. Upon careful consideration of the entire record in this ease, the Court will deny the motion.

I. BACKGROUND

Defendant Timothy Naegele is an attorney licensed to practice law in California and in the District of Columbia. Naegele owns his own law firm as a sole proprietorship. On or about March 29, 2000, Nae-gele filed a Chapter 7 petition for personal bankruptcy in the United States Bankruptcy Court for the District of Columbia. See In re Naegele, Case No. 00-0601 (Bankr.D.C.2000). On April 28, 2005, a federal grand jury returned an eleven-count indictment against Naegele, alleging that he had made numerous misstatements on his bankruptcy forms and in the creditors’ meeting, and charging him with ten counts of making false statements under 18 U.S.C. § 152 and one count of bankruptcy fraud under 18 U.S.C. § 157.

On May 2, 2006, the Court dismissed Counts 1, 2, 3, and 9 of the indictment. See United States v. Naegele, 341 B.R. 349 (D.D.C.2006). The Court declined to dismiss Counts 4 and 11 of the indictment. See Id. On July 18, 2006, the Court declined to dismiss Counts 5, 8 and 11 of the indictment. See July 18, 2006 Memorandum Opinion and Order. In a separate Opinion and Order issued this same day, the Court dismissed Count 7 of the indictment. The only remaining counts, therefore, are Counts 4, 5, 6, 8, 10 and 11.

Trial in this case was scheduled to begin on January 29, 2007. On January 16, 2007, the government and the defendant exchanged trial exhibits in compliance with this Court’s scheduling order. At that time, the government included as proposed trial exhibit GX1B a five-page copy of defendant’s Statement of Financial Affairs (“SOFA”) that forms the basis of the false statements charged in Counts 1, 2, 3 and 7. See Defendant’s Memorandum of Facts and Law Regarding Potential Grand Jury Violations and Further Proceedings, Ex. B (“GX1B”). The first page of the SOFA is date stamped as having been filed on May 4, 2000 in the United States Bankruptcy Court for the District of Columbia, as alleged in the indictment. See Id. at 1; Indictment ¶ 5. What the defendant discovered in reviewing the proposed exhibit, however, was that the last page of the SOFA, containing defendant’s signature and declaration under penalty of perjury as well as questions 19 through 21 of the SOFA, was Bates-stamped “SHER01839.” See GX1B at 5. It therefore is identifiable as having come from the files of Jeffrey Sherman, the bankruptcy attorney who represented the defendant in the underlying bankruptcy proceeding. Documents from Mr. Sherman’s files were only produced to the government on January 10, 2007, after Mr. Sherman’s assertion of the attorney-client privilege to withhold them was overruled by the Court on January 4, 2007 and he was ordered to produce them. See United States v. Naegele, 468 F.Supp.2d 165 (D.D.C.2007).

Counsel for the defendant brought the matter of the government’s proposed trial exhibit, GX1B — containing four pages from the files of the Bankruptcy Court and one from the files of Mr. Sherman — to the Court’s attention on January 19, 2007, [17]*17three days after defense counsel had received the exhibit. See Emergency Motion to Dismiss Count 7 and for Inspection of Grand Jury Minutes (“Mot. Dism. Ct. 7”). The defendant requested that the Court unseal the grand jury transcripts and minutes to determine how Naegele could have been indicted on the counts alleging violations of 18 U.S.C. § 152(3) by filing a SOFA that contained false statements when the government did not have in its possession the signed signature page of the SOFA at the time of the grand jury proceedings. See Id. at 1.

Although it opposed the motion to unseal the grand jury transcript and to dismiss Count 7, the government conceded that at the time the indictment was returned, neither the government nor the grand jury had possession of page 5 of the SOFA, containing the signature portion of the SOFA signed by Naegele. The government also conceded that it had never seen Naegele’s signed SOFA signature page until Mr. Sherman produced his files in response to the Court’s January 4, 2007 Opinion. The government has produced a copy of Exhibit 10 from the grand jury proceedings, which contains the first four pages of Naegele’s SOFA and his bankruptcy Schedules (“GJ Exh. 10”). Included in Grand Jury Exhibit 10 are two copies of the signature page to the bankruptcy Schedules, signed and dated by Naegele on May 3, 2000. Above Mr. Naegele’s signature on each copy are the words, “I declare under penalty of perjury that I have read the foregoing summary and schedules consisting of 19 sheets, and that they are true and correct to the best of my knowledge, information and belief.” No SOFA signature page was discovered in the files of the United States Bankruptcy Court, nor does the government have any evidence that the signature page in Mr. Sherman’s possession (or a copy thereof) was ever provided to the Bankruptcy Court or any other persons associated with the bankruptcy proceeding. See United States’ Consolidated Response in Opposition to Defendant’s Motion to Dismiss for Prosecutorial Misconduct and Supplement to Motion to Dismiss Count 7 for Failure of Proof (“Cons. Opp.”) at 11.

After reviewing the transcripts of the grand jury proceedings in camera and after considering the arguments of both parties, the Court determined that the defendant had demonstrated particularized need entitling him to review all of the grand jury transcripts and ordered them produced. See United States v. Naegele, 474 F.Supp.2d 9 (D.D.C.2007). The Court also scheduled an evidentiary hearing on the issue of potential prosecutorial misconduct before the grand jury. See Id. at 12-13. That hearing was held on February 6 and 7, 2007.

With respect to the SOFA and Grand Jury Exhibit 10, FBI Agent Kendra McLamb testified before the grand jury on April 28, 2005. At that time, the prosecutor presented her with Grand Jury Exhibit 10, consisting of the first four pages of the SOFA, the Schedules, and two copies of the signature or declaration page for the Schedules. The following exchange then occurred:

Q. Okay. Agent McLamb, is Exhibit 10 a group of documents stapled together?
A. Yes, it is.
Q. And is one of the documents entitled Statement of Financial Affairs?
A. Yes.
Q. And if you flip back a few pages, there’s a document with another file stamp on the front of it entitled Summary of Schedules. It’s about four or five pages into this group. Do you see that?
A. Yes.
Q. Summary of Schedules?
[18]*18A. Yes.
Q. And from that page on through the back, are those the bankruptcy schedules that are part of the bankruptcy filing?
A. Yes, they are.
Q.

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United States v. Naegele, 367 B.R. 15, 2007 U.S. Dist. LEXIS 28155, 2007 WL 1140117 (D.D.C. 2007).

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