The opinion of the court was delivered by: WILLIAM M. SKRETNY
Before this Court is defendant's motion to dismiss Counts VI, VII, and VIII of the ten-count Superseding Indictment against him. Trial of this case is scheduled to begin August 22, 1995. The counts defendant moves to dismiss charge that he made false statements and conspired to make false statements in violation of 18 U.S.C. §§ 1001 and 2, and 18 U.S.C. § 371. The other counts of the Indictment charge violations of 18 U.S.C. §§ 371, 1957 and 2, 1623, and 982. Defendant moves to dismiss the false statements counts based on the May 15, 1995 decision of the United States Supreme Court in Hubbard v. United States, U.S. , 115 S. Ct. 1754, 131 L. Ed. 2d 779 (1995). Oral argument on defendant's motion was heard July 28, 1995.
For the reasons set forth below, defendant's motion to dismiss Counts VI, VII, and VIII of the Indictment is denied.
The parties do not dispute the operative facts underlying this motion.
In January 1991, the Drug Enforcement Agency ("DEA") executed a search warrant at the residence of William Hood in Lancaster, New York. (Daniels Aff. P 5; Response, p. 2.) Agents found a promissory note and agreement dated December 18, 1988, evidencing a $ 65,000 loan that Hood made to defendant and Anthony DeMola. Defendant and DeMola promised to repay the loan in equal monthly installments from February 1, 1989, until February 1, 1991. (Daniels Aff. P 7, exh. A; Response, p.2.) On January 21, 1991, Internal Revenue Service Special Agent Patricia Kalwara applied for a seizure warrant for Hood's rights under the loan on the ground that the loan proceeds were traceable to Hood's cocaine transactions. (Daniels Aff. P 8, exh. B; Response, p. 2.) The Hon. Edmund F. Maxwell, United States Magistrate Judge for the Western District of New York, granted the application. The warrant was filed in the Office of the Clerk of the Western District of New York on February 12, 1991, under Miscellaneous Docket No. Civ. 91-19. (Daniels Aff. P 9, exh. C.) The warrant, in short, directed defendant, DeMola, and Hood to pay the balance of what was owed under the loan.
On March 6, 1991, the parties appeared before Magistrate Judge Maxwell, who stayed execution of the warrant. (Daniels Aff. P 10, Response, pp. 2-3.) John Pieri, Esq., appeared on behalf of defendant in subsequent proceedings. According to defendant, Magistrate Judge Maxwell requested and directed that the parties meet in an attempt to settle this matter. (Daniels Aff. P 11.) Assistant United States Attorney ("AUSA") Richard D. Kaufman sent Magistrate Judge Maxwell a letter dated November 14, 1991, stating:
I have been in contact with John Pieri, Esq., who is representing Vincent S. Tracy concerning this matter. Mr. Pieri has assured me that Mr. Tracy is attempting to reconstruct whatever payments were made on the contract, which the Government has agreed to credit to obligator. I would recommend that we proceed in this voluntary, informal manner in an attempt to resolve some of the issues that will likely arise in any future litigation. However, if you determine that a status meeting should be held, please so advise.
(Daniels Aff. P 12, exh. D., Response, p. 3, n.2.)
Pier later provided AUSA Kaufman with two affidavits: (1) the affidavit of Anthony F. DeMola dated February 25, 1992, and (2) the affidavit of James D. DeMola dated February 3, 1992.
The affidavits stated that Anthony DeMola had repaid $ 20,000 of the debt to Hood from monies DeMola had borrowed from his father, James DeMola. (Daniels Aff. PP 13-14; Response, p. 3.) These affidavits, which contain statements the government claims are false, are the basis of the § 1001 counts against defendant. (Daniels Aff. P 5; Response, p. 3, n.3.) Pieri testified before the grand jury that he submitted the affidavits to AUSA Kaufman "for him to evaluate them and determine whether he would give us any credit for the monies that were indicated." Defendant testified that the affidavits "were prepared to be a claim to the Government to be negotiated." (Response, p. 4, exhs.) AUSA Kaufman testified that the affidavits were among a "number of things" Pieri provided during settlement negotiations.
A. The Indictment and Section 1001
Counts VII and VIII of the indictment charge that defendant "did knowingly, willfully and unlawfully cause false, fictitious and fraudulent statements and representations to be made in a matter within the jurisdiction of the Office of the United States Attorney for the Western District of New York" ("U.S. Attorney's Office") in violation of 18 U.S.C. § 1001. Count VI charges ...