United States v. Walters

963 F. Supp. 2d 125, 2013 WL 4535904, 2013 U.S. Dist. LEXIS 122546
CourtDistrict Court, E.D. New York
DecidedJuly 2, 2013
DocketNo. 11 CR 683(NG)
StatusPublished
Cited by4 cases

This text of 963 F. Supp. 2d 125 (United States v. Walters) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Walters, 963 F. Supp. 2d 125, 2013 WL 4535904, 2013 U.S. Dist. LEXIS 122546 (E.D.N.Y. 2013).

Opinion

OPINION & ORDER

GERSHON, District Judge:

Defendants, Lee Hymowitz and Michael Freeman (“Hymowitz” and “Freeman,” or, collectively, “Defendants”), are charged by Superseding Indictment (the “Indictment”) with conspiracy to commit wire fraud (Count Two), wire fraud (Count Three), conspiracy to commit money laundering (Count Seven), and money laundering (Count Eight). By this motion, Hymowitz and Freeman seek to dismiss the Indictment, or, in the alternative, to compel the government to produce a bill of particulars.1

[129]*129Defendants also move to sever their trial from that of co-defendant, Stevenson Dunn (“Dunn”), or to redact Dunn’s post-arrest statement, in order to preserve their confrontation rights, in accordance with Bruton v. United, States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968), and its progeny.2

For the reasons set forth below, the Defendants’ motion is denied in part and granted in part.

BACKGROUND

According to the Indictment, between 2005 and 2011, the New York City Department of Housing Preservation and Development (“HPD”) administered various programs intended to develop affordable housing. (Ind. ¶¶2, 13.) In connection with these programs, HPD selected real estate developers, or “sponsors,” who would then, with HPD, select general contractors to manage the construction and other work the projects required. (Id. ¶ 3.) One such developer selected by HPD was co-defendant Dunn, whose corporate entities included SML Development LLC, SML Bed Stuy Development, LLC, and Hancock Street SML LLC (collectively, the “SML Entities”). (Id. ¶7.) Hymowitz and Freeman were partners, with Dunn, in the SML Entities, and, separately, in the law firm of Hymowitz & Freeman. (Id.)

The Indictment contains allegations that Dunn, Hymowitz and Freeman solicited and received kickback payments from certain general contractors (“John Doe # 1” and “John Doe # 2”) in exchange for awarding them work in connection with various HPD projects. Dunn, Hymowitz and Freeman allegedly included the amounts of the kickback payments in requisitions submitted to HPD, “thereby passing on the costs of their own corrupt activity to HPD.” (Ind.f 13.) Hymowitz and Freeman also allegedly provided to John Doe # 1 a “sham retainer agreement” for legal services and, to John Doe # 1 and John Doe # 2, “false and inflated invoices” for certain services and supplies. (Id.) It is further alleged that Dunn threatened John Doe # 2 and his family with violence when John Doe # 2 failed to make some of the kickback payments, and that Dunn made a cash bribe payment to John Doe #3. (Id.)

While the Indictment contains charges of Racketeering Act violations, money laundering, wire fraud, extortion, bribery and various conspiracies against Dunn, the only charges asserted as to Hymowitz and Freeman are conspiracy to commit wire fraud, wire fraud, money laundering, and conspiracy to commit money laundering. (See id. ¶¶ 27-33.)

The government has indicated that it expects to introduce at the trial of Dunn, Hymowitz and Freeman, Dunn’s post-arrest statement, in which he implicates himself in the kickback scheme underlying the wire fraud and money laundering charges. Although the government has proposed certain redactions to the statement, Defendants argue that they are insufficient to protect their constitutional rights under Bruton, 391 U.S. 123, 88 S.Ct. 1620.

DISCUSSION

A. Standard of Review on a Motion to Dismiss

Pursuant to Rule 7 of the Federal Rules of Criminal procedure, the indictment “must be a plain, concise, and definite written statement of the essential [130]*130facts constituting the offense charged.” On a motion to dismiss, the court must treat the allegations, contained in the indictment as true. See, e.g., United States v. Coffey, 361 F.Supp.2d 102, 111 (E.D.N.Y.2005). Moreover, an indictment is read “to include facts which are necessarily implied by the specific allegations made.” United States v. Stavroulakis, 952 F.2d 686, 693 (2d Cir.1992). “[A]n indictment is sufficient when it charges a crime with sufficient precision to inform the defendant of the charges he must meet and with enough detail that he may plead double jeopardy in a future prosecution based on the same set of events.” Id. In fact, “[a]n indictment need do little more than to track the language of the statute charged and state the time and place (in approximate terms) of the alleged crime.” United States v. Tramunti, 513 F.2d 1087, 1113 (2d Cir.1975). “Generally, the indictment does not have to specify evidence or details of how the offense was committed. Simply put, the validity of an indictment is tested by its allegations, not by whether the Government can prove its case.” Coffey, 361 F.Supp.2d at 111 (citations omitted).

B. Sufficiency of the Wire Fraud Charges

Under § 1343 of Title 18, United States Code, it is unlawful to transmit by wire any writing or signal for the purpose of executing a scheme to defraud.3 It is well-settled that the elements of a violation of this statute are a scheme to defraud, money or property as the object of that fraud, and use of the wires to further the scheme. See, e.g. United States v. Miller, 997 F.2d 1010, 1017 (2d Cir.1993). The allegations relating to the “scheme to defraud” must also reflect the defendants’ contemplation of “actual harm or injury to their victims.” United States v. Novak, 443 F.3d 150, 156 (2d Cir.2006).

Defendants argue that the allegations set forth in the Indictment are insufficient to support a charge of wire fraud for two reasons, both relating to the “scheme to defraud.”4 First, Defendants argue that, to the extent the allegations relating to the scheme to defraud arise out of a failure to disclose, rather than an affirmative misrepresentation, the Indictment must also contain allegations of a fiduciary relationship or obligation. Second, the Defendants argue that, in order to amount to a scheme to defraud within the meaning of § 1343, the alleged scheme must consist of more than “only a deceit;” the Defendants argue that, if there is no discrepancy between the benefits anticipated and those received by the alleged victim, then there is no scheme to defraud within the statute.

With respect to the first argument, Hymowitz and Freeman assert that the failure to acknowledge receipt of a bribe in a requisition for payment is an omission, not an affirmative misrepresentation and, as such, does not amount to a scheme to defraud in the absence of a fiduciary relationship between the parties. However, the inclusion in a requisition for payment, [131]*131of the amount of a kickback payment received by Defendants, as a “cost” to be recouped by them, is an affirmative misrepresentation.

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963 F. Supp. 2d 125, 2013 WL 4535904, 2013 U.S. Dist. LEXIS 122546, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-walters-nyed-2013.