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UNITED STATES v. TEYIBO

February 14, 1995

UNITED STATES OF AMERICA, against DANIEL O. TEYIBO, a/k/a "Daniel O. Teyido," a/k/a "Richard K. Gant," a/k/a "Samuel O. Ajao," a/k/a "Jack Renfro," Defendant.


The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this criminal action charging defendant Daniel O. Teyibo, a/k/a "Daniel O. Teyido," a/k/a "Richard K. Gant," a/k/a "Samuel O. Ajao," a/k/a "Jack Renfro" ("Teyibo") with nine counts of wire fraud and eight counts of securities fraud, Teyibo moves for an order suppressing all evidence, dismissing the indictment and releasing the grand jury minutes. The Government opposes Teyibo's motions. For the reasons set forth below, Teyibo's motions are denied.

 BACKGROUND

 I. The Civil Proceeding

 A. The Informal Inquiry

 In mid-1991, the Securities and Exchange Commission (the "SEC") initiated an informal inquiry *fn1" concerning the activities of Teyibo and several entities he purported to represent, including JFM Government Securities, Inc. ("JFM Government") and First African Trust Corporation ("First African"). According to the Government, on July 15, 1991, Scott A. Cook ("Cook"), a staff attorney at the SEC, sent a letter to Teyibo requesting that he "voluntarily provide certain information and documents" in connection with the investigation. See letter from Cook to Teyibo of 7/15/91, annexed to the Affidavit of Amy E. Millard, sworn to on Dec. 5, 1994 (the "Millard Aff.") as Exh. "A." The letter cautioned Teyibo as follows: "Please understand that you have the right to be represented by counsel in connection with this matter." Id. Cook also enclosed a copy of SEC Form 1662, a document providing information to individuals of whom such requests to supply information have been made. See SEC Form 1662, annexed to the Millard Aff. as Exh. "B." SEC Form 1662 states, in pertinent part:

 
Fifth Amendment and Voluntary Testimony. Information you give may be used against you in any federal, state, local or foreign administrative, civil or criminal proceeding brought by the Commission or any other agency. You may refuse, in accordance with the rights guaranteed to you by the Fifth Amendment to the Constitution of the United States, to give any information that may tend to incriminate you or subject you to a fine, penalty or forfeiture.

 Id. at 1-2 (emphasis in original). SEC Form 1662 provides further:

 
Routine Uses of Information. The Commission often makes its files available to other governmental agencies, particularly United States Attorneys and state prosecutors. There is a likelihood that information supplied by you will be made available to such agencies where appropriate.

 Id. at 3. With respect to a subject's right to counsel, SEC Form 1662 states:

 
Counsel. You have the right to be accompanied, represented and advised by counsel of your choice. Your counsel may advise you before, during and after your testimony; question you briefly at the conclusion of your testimony to clarify any of the answers you give during testimony; and make summary notes during your testimony solely for your use. If you are accompanied by counsel, you may consult privately.

 Id. at 1 (emphasis in original). Neither Teyibo nor the entities he purported to represent responded to the SEC's voluntary requests for information.

 According to the Government, on February 27, 1992, Robert Skrzypczak ("Skrzypczak"), another SEC staff attorney, sent a second letter to Teyibo again requesting information. The letter was again accompanied by a copy of SEC Form 1662. The next day, the SEC received a letter from Teyibo in which he stated that, "after consultation with our counsel, . . . we have decided not to provide you with any information." See letter from Teyibo *fn2" to Skrzypczak of Feb. 28, 1992, annexed to the Affidavit of Robert Skrzypczak, sworn to on Jan. 13, 1995 (the "Skrzypczak Aff.") as Exh. "3."

 On March 2, 1992, Teyibo telephoned Skrzypczak at the SEC to request that the SEC cease its investigation. According to the Government, Skrzypczak asked Teyibo if he was represented by counsel and Teyibo responded that although he had retained counsel, he would not disclose the name of his attorney to the SEC. See Skrzypczak Aff. at P 10.

 B. The Formal Investigation

 C. The Civil Complaint

 On December 23, 1992, the SEC filed a civil complaint against Teyibo and JFM Government in the United States District Court for the District of Maryland, seeking a permanent injunction preventing defendants from continuing to engage in practices in violation of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15C of the Securities Exchange Act of 1934 (the "civil action"). See Complaint for Permanent Injunction and Other Relief, dated Dec. 23, 1992, annexed to the Millard Aff. as Exh. "C." Specifically, the complaint alleged that Teyibo and JFM Government "engaged in a scheme to defraud national and foreign broker-dealer counterparties in trades of U.S. Treasury notes and bonds." Id. at 4. The complaint alleged further that Teyibo's scheme involved accepting profits from successful transactions with broker-dealers while failing to settle losses from failed transactions. Id. at 5. Finally, the complaint asserted that Teyibo held himself out as a dealer in government securities without registering with the SEC. Id. Shortly thereafter, on February 12, 1993, United States District Judge Joseph Young issued a temporary restraining order and ordered a freeze of Teyibo's assets. See Temporary Restraining Order, annexed to the Millard Aff. as Exh. "D," at 6.

 D. The March 3 Teleconference

 On March 3, 1993, United States District Judge Benson Everett Legg ("Judge Legg") held a teleconference in the civil action (the "March 3 Teleconference"). Several issues were raised at the March 3 Teleconference, including Teyibo's attempt to retain counsel and the SEC's desire to schedule a deposition for Teyibo. According to the Government, Judge Legg indicated to Teyibo that he could use funds to retain counsel from his frozen assets so long as he made a written proffer stating which assets he would liquidate, where the funds came from and for what purposes they would be used. After Teyibo rejected these conditions, Judge Legg ordered Teyibo to appear at the SEC's offices in Washington, D.C. on March 4, 1993 for a scheduled deposition (the "March 3 Order").

 According to Teyibo, during the March 3 Teleconference, Judge Legg advised him that he should provide evidence to the SEC because, in his view, there was "no criminality whatsoever" in Teyibo's activities. See Affidavit of Daniel O. Teyibo, sworn to on Nov. 18, 1994 (the "Teyibo Aff.") at P 10. Teyibo argues that this statement "duped" him into providing potentially incriminating evidence to the Government. According to SEC attorney Skrzypczak, a participant in the March 3 Teleconference, however, Judge Legg did not so inform Teyibo. See Skrzypczak Aff. at P 26 n.21; Millard Aff. at P 20.

 E. The Deposition

 Subsequently, on March 4 and March 5, 1993, Teyibo appeared at the SEC offices in Washington, D.C., without an attorney, and provided deposition testimony as well as certain documents requested by the SEC. Teyibo alleges that he was coerced into producing evidence at the deposition. Specifically, Teyibo claims that:

 
At the deposition I presented about a six inch stack of private documents and records to the SEC pursuant to the Court order. Furthermore, during the depositions I made repeated requests to stop the proceedings until such time that I could retain counsel proficient in securities laws. However, [the] SEC refused and insisted that the proceedings continues [sic] because the district court ordered me to appear and testify without counsel.

 See Teyibo Aff. at P 11.

 The Government disputes Teyibo's account of the circumstances surrounding the deposition. Specifically, the Government alleges that Teyibo freely provided deposition testimony on March 4, 1993 and voluntarily returned the following day to complete the examination. Moreover, although Teyibo requested an adjournment of the proceeding on March 5, 1993, the SEC determined not to accede to this request on the ground that the March 3 Order prevented any adjournment of the proceedings.

 F. The Judgment

 On March 12, 1993, Judge Legg entered a preliminary injunction against Teyibo and ordered that Teyibo's assets remain frozen. See Preliminary Injunction Order, annexed to the Millard Aff. as Exh. "E." Subsequently, on February 2, 1994, a final judgment was entered against Teyibo and JFM Government, finding defendants "jointly and severally liable for disgorgement of all of their trading profits and money losses avoided in connection with their transactions." See Final Judgment, annexed to the Millard Aff. as Exh. "F," at 8. Accordingly, the court ordered Teyibo and JFM Government to disgorge the sum of $ 823,275.81 plus $ 309.83 per day for each day after December 31, 1993 up to the entry of judgment plus post-judgment interest. Id. Additionally, the court imposed a civil penalty, pursuant to 15 U.S.C. § 78u(d)(3), in the amount of $ 100,000.00, representing "the costs (in part) to [the SEC] in investigating and prosecuting this civil action." Id. at 11. On December 29, 1994, the Fourth Circuit Court of Appeals affirmed the decision of the District Court. See SEC v. Teyibo, Nos. 94-1280, 94-1435, 94-1451 and 94-1515, 1994 U.S. App. LEXIS 36705 at *3 (4th Cir. Dec. 29, 1994).

 II. The Criminal Proceeding

 In late February 1992, the United States Attorney's Office for the Southern District of New York (the "United States Attorney's Office") learned about the SEC's investigation into Teyibo's activities. Subsequently, the United States Attorney's Office commenced a grand jury investigation.

 On August 19, 1993, the grand jury returned a seventeen count indictment, charging Teyibo with nine counts of wire fraud, in violation of 18 U.S.C. §§ 2 and 1343, and eight counts of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 and 18 U.S.C. § 2. The indictment alleges that:

 
From in or about 1991, up to and including the date of the filing of this Indictment, [Teyibo] made false and misleading statements and representations to broker-dealer firms in New York, New York and elsewhere, and provided them with various documents, including false, fictitious and bogus financial statements of various entities he purported to represent, to induce the broker-dealers to trade United States securities with him, for the purpose of enriching himself with securities trading profits without paying for all trading losses.

 See Indictment at P 2.

 On August 24, 1993, Teyibo appeared before Magistrate Judge Nina Gershon, who set the following the bail conditions: (1) a $ 500,000 personal recognizance bond secured by $ 100,000 cash or property, co-signed by five financially responsible persons, including Teyibo's wife; (2) Pretrial Services is to maintain strict supervision; (3) Teyibo must surrender his passport; and (4) officials in Nigeria and Ghana are to be notified that Teyibo is not permitted to travel outside the United States. As Teyibo has not posted bail, he has been incarcerated since the date of his arrest.

 On September 13, 1993, this Court held an initial pre-trial conference in the present action. At the September 13, 1993 conference, Teyibo indicated that he was dissatisfied with his appointed counsel, Cary Bricker of the Legal Aid Society, Federal Defenders Division, and that he intended to hire private counsel. See Tr. of 9/13/93 conference, annexed to the Millard Aff. as Exh. "G," at 3-4, 8. At that time, Teyibo also stated that he wished to appeal the bail conditions set by the Magistrate Judge. Id. at 4. The Government similarly informed the Court that it objected to the conditions of bail and indicated that it intended to seek a revocation of bail. Id. at ...


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