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U.S. v. FRUCHTER

July 11, 2000

UNITED STATES OF AMERICA,
V.
PHILIP FRUCHTER, STEVEN FRUCHTER, LAWRENCE BRAUN, DAUDA YAGUE, A/K/A "CHEIK," MAMADOU SYLLA, MITCHELL GRAND, MIGUEL MERCEDES, SAMBA WILLIAM, MUNINAUTH PULCHAN, A/K/A "RAMISH," AND FRANK SINGH, DEFENDANTS.



The opinion of the court was delivered by: Batts, District Judge.

        MEMORANDUM & ORDER

Defendants are charged in a forty-four (44) count Indictment with racketeering, conspiracy, mail fraud, and numerous other offenses. Defendants now move for various forms of relief.

I. THE INDICTMENT

On April 13, 1999, the Government filed a forty-four (44) count Indictment charging Defendants with racketeering, conspiracy, mail fraud, and numerous other offenses. Defendants are ten principals, owners and employees of a mail sorting company called American Presort, Inc. ("API").

Counts One and Two charge each of the Defendants with violating the substantive and conspiracy provisions of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962, based on their involvement in alleged mail fraud schemes against the United States Postal Service ("USPS") and clients of API, as well as acts of bribery of USPS employees, in violation of 18 U.S.C. § 1962(c). Count Three charges each of the Defendants with conspiracy to commit mail fraud, postage meter fraud, false statements and bribery, in violation of 18 U.S.C. § 1341, 501, 1001 and 201. Counts Four through Fifteen charge each of the Defendants with mail fraud against the USPS in violation of 18 U.S.C. § 1341 and 1342. Count Sixteen charges Defendants Steven Fruchter ("Steven Fruchter"), Philip Fruchter ("Philip Fruchter") and Lawrence Braun ("Braun") with postage meter fraud in violation of 18 U.S.C. § 501 and 502. Count Seventeen charges Steven Fruchter with postage meter fraud in violation of 18 U.S.C. § 501 and 502. Counts Eighteen through Twenty-Eight charge each of the Defendants with making false statements in violation of 18 U.S.C. § 1001 and 1002. Count Twenty-Nine charges Steven Fruchter, Philip Fruchter and Braun with mail fraud against API clients in violation of 18 U.S.C. § 1341 and 1342. Counts Thirty through Forty-Four charge Steven Fruchter, Philip Fruchter, Braun and Dauda Yague ("Yague") with bribery of Postal Service employees in violation of 18 U.S.C. § 201 and 202. The Indictment also contains a forfeiture allegation against Defendants Steven Fruchter, Philip Fruchter and Lawrence Braun.

II. DISCUSSION

Defendants move for various forms of relief. Defendant Steven Fruchter seeks to dismiss Counts One and Two on the grounds that the Counts fail to allege a "pattern of racketeering activity" as required by 18 U.S.C. § 1962. Defendants Mamadou Sylla ("Sylla"), Miguel Mercedes ("Mercedes"), Samba William ("William"), Muninauth Pulchan ("Pulchan") and Frank Singh ("Singh") also seek dismissal of Counts One and Two on the grounds that they did not participate in the operation, management or direction of the alleged substantive or conspiracy racketeering violations. Defendants Braun, Mercedes, Pulchan and Singh move to dismiss Count Four alleging that it is duplicitous. Defendants Mercedes and Singh seek dismissal of Counts Five through Fifteen on the grounds that these Counts fail to allege sufficiently the fundamental mailing component of 18 U.S.C. § 1341. For the same reason, Defendant Singh seeks dismissal of Counts Thirteen through Twenty-Three. Defendant Pulchan seeks to dismiss Counts Eighteen through Twenty-Eight on the grounds of multiplicity. Defendant Singh moves to dismiss these same Counts, alleging they constitute an ex post facto violation. Defendant Braun seeks to dismiss Count Twenty-Nine on the ground that it is duplicitous.

Defendants Philip Fruchter, Yague and Pulchan seek to suppress all physical evidence obtained through searches of API. In addition, Defendant Philip Fruchter requests a Franks hearing on the reliability of the information provided to the Magistrate Judge at the time of the application of the search warrants. The Defendants also request a suppression hearing, alleging that the warrants were overbroad, the postal inspectors went beyond the scope of the warrant and that the second warrant was the fruit of the poisonous tree of the first warrant.

Defendant Yague seeks suppression of his post-arrest statements on the grounds that he was not advised of his Miranda rights until after custodial interrogation began, that he did not understand the rights when they were eventually given and thus he did not validly waive his rights, and that his statements were involuntary. Defendant Yague also requests a suppression hearing.

Defendants Sylla, Mitchell Grand ("Grand"), Mercedes, William, Pulchan and Singh all seek severance from Defendants Steven Fruchter, Philip Fruchter, Braun and Yague. Defendants argue that they should not be prejudiced from the spillover of the evidence against these four principal defendants and that Defendant Yague gave a statement which implicates each of them. In the alternative, Defendants argue that the Counts against them should be severed from the Counts in which they are not named.

Defendants Braun, Grand, Sylla, and William seek various forms of discovery including bills of particulars, Brady material and 404(b) material. Defendant Grand also seeks the preservation of the rough notes of Government agents and early production of Jencks Act material.

Finally, each Defendant joins in the motions of his co-Defendants to the extent such action is beneficial.

A. Motions to Dismiss

1. Counts One and Two

Count One alleges substantive racketeering violations against all of the Defendants. (Indictment ¶¶ 1-12.) Count Two incorporates Count One by reference, and alleges that each of the Defendants "agreed that a conspirator would commit at least two of the acts of racketeering in the conduct of the affairs of the enterprise." (Indictment ¶ 15.)

Defendant Steven Fruchter moves for dismissal of Counts One and Two of the Indictment, for failure to allege a "pattern of racketeering activity" as required by 18 U.S.C. § 1962. Defendants Sylla, Mercedes, William, Pulchan and Singh also seek dismissal of Counts One and Two on the grounds that they did not participate in the operation, management or direction of the alleged substantive or conspiracy racketeering violations, as required in Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993).

a. Pattern of Racketeering

The crux of Stephen Fruchter's argument is that the alleged predicate acts, when viewed in the context of API's day-to-day operations, constitute "no more than a handful of isolated acts that account for a minuscule percentage of the business of API." (Stephen Fruchter Mem. at 8.) Thus, Stephen Fruchter argues, they are "no more than sporadic activity." (Stephen Fruchter Mem. at 2-10.)

"Review of a criminal RICO indictment . . . is governed by Rule 7(c)(1) of the Federal Rules of Criminal Procedure, which only requires that the indictment be a plain, concise and definite written statement of the essential facts constituting the offense charged." United States v. Reale, No. 96 Cr. 1069, 1997 WL 580778 at *5, (S.D.N.Y. Sept.17, 1997) (internal quotations omitted). "An indictment need only provide a defendant with sufficient notice to permit him to defend against the charges and to bar future charges that may place him in double jeopardy." United States v. Wang, No. 98 Cr. 0199, 1998 WL 556160 at *1, (S.D.N.Y. Aug.31, 1998) (citing Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974) and United States v. Tramunti, 513 F.2d 1087, 1113 (2d Cir. 1975)).

A "pattern of racketeering activity" has three components: 1) at least two predicate acts of racketeering activity within ten years of one another; 2) interrelatedness of the predicate acts; and 3) the predicate acts reveal "continued, or the threat of continued, racketeering activity." United States v. Diaz, 176 F.3d 52, 93 (2d Cir. 1999).

The relatedness component may be satisfied by pleading predicate acts that have "the same or similar purposes, results, participants, victims, or methods of commission." Id. Further, "[t]wo [predicate] . . . acts that are not related to each other may nevertheless be related indirectly because each is related to the RICO enterprise." United States v. Minicone, 960 F.2d 1099, 1106 (2d Cir. 1992) (internal quotations omitted).

"The continuity prong of a RICO pattern `is both a closed-and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition.'" Diaz, 176 F.3d at 93 (citing H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 241, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989)). Closed-end continuity may be demonstrated by "a series of related predicates extending over a substantial period of time." Cofacredit, S.A. v. Windsor Plumbing Supply Co., 187 F.3d 229, 242 (2d Cir. 1999) (in context of civil RICO, closed-end continuity shown when predicate acts occur over period of two or more years). The continuity prong also may be satisfied by showing open-end continuity; for open-end continuity, the predicate acts need not extend over a substantial period of time, but there must be "a threat of continuing criminal activity beyond the period during which the predicate acts were performed." Id.

Here, it is clear that Count One of the Indictment has sufficiently alleged a pattern of racketeering activity. The Indictment alleges fifty-one (51) predicate acts occurring between approximately June 1994 and June 14, 1997. (Indictment ¶¶ 6-12.) Relatedness is also sufficiently pled, as all of the predicate acts are alleged to have the same purpose and results, namely, defrauding of the USPS and certain clients of API. Further, the acts are alleged to have been committed by many of the same Defendants, and are grouped in the Indictment according to methods of commission. See United States v. Gelb, 881 F.2d 1155, 1163 (2d Cir. 1989) (relatedness in criminal RICO satisfied where each of defendant's schemes "sought to cheat the [United States] Postal Service by not paying the appropriate postage;" acts included burying unpaid mail beneath layers of metered, paid mail, use of stolen postage meter, tampering with postage meters, and bribery of USPS employees).

The alleged predicate acts span three years, thus closed-end continuity is sufficiently pled. The nature of the alleged predicate acts suggests that open-end continuity is also sufficiently pled, since a jury could infer that similar acts would have continued but for the intervention of law enforcement. See Gelb, 881 F.2d at 1163-64 (continuity satisfied in criminal RICO when predicate acts continued over five years and "but for their discovery surely would have continued").

Accordingly, Stephen Fruchter's motion to dismiss Counts One and Two, for failure to plead sufficiently a pattern of racketeering activity, is hereby DENIED.

b. The Reves Test

Defendants Mercedes, Pulchan, Singh, Sylla and William also move to dismiss Counts One and Two pursuant to Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993), asserting that they did not participate in the operation or management of the enterprise or play a part in directing the enterprise's affairs.*fn1 (See, e.g., Singh Mem. at 1-2; Sylla Mem. at 1-6.)

Specifically, Singh asserts that a defendant must be alleged to have a managerial or operational role in the operation of the enterprise in order to be subject to RICO liability, (Singh Mem. at 1-2), and that the RICO charges against Singh allege only aiding and abetting liability, not substantive RICO or RICO conspiracy. (Id. at 2.) Pulchan, Sylla and William assert that, notwithstanding Sylla's title as "production manager" and Pulchan's job description as a "night shift manager," their duties were "strictly ministerial" and "involved almost no exercise of discretion at all." (Sylla Mem. at 5; Pulchan Notice of Motion ¶¶ 12-13; Ltr. from Daniel Nobel, Esq., dated Dec. 21, 1999, at 1-2, 3.) In addition to the foregoing arguments, Mercedes asserts that he is only one of the technicians who worked with the Bell & Howell mail sorting machines. (Mercedes Mem. at 68.)

The provision of the RICO statute under which the Defendants are charged in Count One provides that "[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in . . . interstate . . . commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs." 18 U.S.C. § 1962(c). In interpreting this provision, the Supreme Court, in Reves, 507 U.S. 170, 179, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993), held that to "participate . . . in the conduct of the enterprise's affairs, one must participate in the operation or management of the enterprise." The Supreme Court noted that while "RICO liability is not limited to those with primary responsibility for the enterprise's affairs . . . some part in directing the enterprise's affairs is required." Id. at 179, 113 S.Ct. 1163. The Supreme Court also held that the word "participate," as used in the RICO statute, was more restrictive than the phrase "aid and abet," which encompasses all assistance rendered by works, acts, encouragement, support, or presence. Id. at 178, 113 S.Ct. 1163.

However, if any conclusion may be drawn from the plethora of post-Reves decisions, it is only "that the commission of crimes by lower level employees of a RICO enterprise may be found to indicate participation in the operation or management of the enterprise but does not compel such a finding." United States v. Allen, 155 F.3d 35, 42 (2d Cir. 1998) (emphasis in original).

As the Court has already noted, an indictment is legally sufficient "when it charges a crime (1) with sufficient precision to inform the defendant of the charges he must meet and (2) with enough detail that he may plead double jeopardy in a future prosecution based on the same set of events." Reale, 1997 WL 580778 at *5 (citing United States v. Stavroulakis, 952 F.2d 686, 693 (2d Cir. 1992)).

Upon thorough examination of Counts One and Two of the Indictment, the Court finds Counts One and Two to be legally sufficient. Both Counts sufficiently track the language of the RICO statute and set forth the time and place of the alleged crimes. (See, e.g., Indictment ¶¶ 2, 14.) The allegations in both Counts adequately "inform the defendant[s] of the charges [they] must meet" and provide them with enough detail to enable them to plead double jeopardy in any future prosecution based on the same events. Stavroulakis, 952 F.2d at 693. Indeed, the Indictment lists fifty-one predicate acts with specific dates for each of those acts.

Defendants' arguments that the Reves test cannot be met, are premature. Defendants argue that the Indictment is legally insufficient because the Government will not be able to establish that they were involved in the operation or management of the enterprise. What the Defendants appear to be challenging is not the sufficiency of the Indictment, so much as the adequacy of the evidence upon which the Indictment is based. See, e.g., United States v. Elson, 968 F. Supp. 900, 905 (S.D.N.Y. 1997) (noting difference between sufficiency of indictment and adequacy of evidence to support the charges).

However, it is well established that an indictment that is valid on its face, such as the Indictment here, may not be dismissed on the ground that it is based on inadequate or insufficient evidence. See Reale, 1997 WL 580778 at *6 (collecting cases). Any challenge to the sufficiency of the evidence should be made pursuant to Rule 29 of the Federal Rules of Criminal Procedure. See United States v. Harris, 805 F. Supp. 166, 172 (S.D.N.Y. 1992), aff'd, 79 F.3d 223 (2d Cir. 1996) (denying pretrial motion to dismiss indictment on ground that evidence was insufficient and stating that close of Government's case was appropriate time for such a motion); see also United States v. Payden, 613 F. Supp. 800, 809 (S.D.N.Y.) aff'd, 768 F.2d 487 (2d Cir. 1985) (it is "well established that a facially valid indictment . . . may not be challenged on the ground that it was based on inadequate evidence."). Accordingly, Defendants' motion to dismiss Counts One and Two for failure to satisfy the Reves test is DENIED.

2. Count Four and Count Twenty-Nine

"An indictment is duplicitous if it joins two or more distinct crimes in a single count." United States v. Aracri, 968 F.2d 1512, 1518 (2d Cir. 1992). The prohibition against duplicitous indictments serves the following policy considerations:

avoiding the uncertainty of whether a general verdict of guilty conceals a finding of guilty as to one crime and a finding of not guilty as to another, avoiding the risk that the jurors may not have been unanimous as to any one of the crimes charged, assuring the defendant adequate notice, providing the basis for appropriate sentencing, and protecting against double jeopardy in a subsequent prosecution.

United States v. Margiotta, 646 F.2d 729, 733 (2d Cir. 1981) (internal citations omitted).

However, "acts that could be charged as separate counts of an indictment may instead be charged in a single count if those acts could be characterized as part of a single continuing scheme." Aracri, 968 F.2d at 1518. Further, an indictment may allege "in a single count that . . . the defendant committed [the offense] . . . by one or more specified means." Fed R. Cr. P. 7(c)(1) (emphasis added).

The policy considerations regarding duplicitous indictments "suggests that a single count of an indictment should not be found impermissibly duplicitous whenever it contains several allegations that could have been stated as separate offenses . . . but only when the failure to do so risks unfairness to the defendant." Margiotta, 646 F.2d at 733 (stating that risk of unfairness is "slight" in case of mail fraud "where the essence of the alleged wrong is the single scheme to defraud and the various mailings, though they are technically acts that violate the federal statute, are really the jurisdictional bases for federal prosecution"). See also United States v. King, No. 98-CR-91A, 2000 WL 362026 at *24 (W.D.N.Y. Mar.24, 2000) (denying motion to dismiss on alleged duplicity of mail and wire fraud); United States v. Gordon, 990 F. Supp. 171, 178 (E.D.N.Y. 1998) (finding multiple transactions and acts alleged in one count of money laundering permissible and not duplicitous; defendant had notice of charges against him and could ascertain scope of double jeopardy); United States v. Brewer, 768 F. Supp. 104, 105 (S.D.N.Y. 1991) (two acts of credit card fraud could be charged in single count of indictment as part of single scheme to defraud).

Upon review of the Indictment, the Court finds that Counts Four and Twenty-Nine as alleged will not prejudice the Defendants, as both the acts charged in both Counts are plainly alleged as part of a single scheme to defraud for each Count. To the extent that any of the policy considerations enumerated in Margiotta are implicated here, such concerns may be addressed through a bill of particulars or an appropriate instruction to the jury. Brewer, 768 F. Supp. at 106 (bill of particulars or jury instruction may be used to address potentially duplicitous counts).

Accordingly, Defendants' motion to dismiss Counts Four and Twenty-Nine on grounds of duplicity is hereby DENIED as to both Counts.

3. Counts Eighteen through Twenty-Eight

a. Multiplicity

Defendant Singh argues that Counts Eighteen through Twenty-Eight should be dismissed because they allege eleven instances of criminal conduct where, "[i]n essence, the conduct alleged is a single act." (Singh's Mem. at 6.) Singh relies on United States v. Molinaro, 11 F.3d 853 (9th Cir. 1993), which dealt with specific language in the bank fraud statute, 18 U.S.C. § 1344, language not present in the statute at issue here, 18 U.S.C. § 1001.

"An indictment is multiplicitous when it charges a single offense as an offense multiple times, in separate counts, when, in law and fact, only one crime has been committed." United States v. Walsh, 194 F.3d 37, 46 (citations omitted). "The basic inquiry is whether each offense charged requires proof of a fact which the other does not." United States v. Reed, 639 F.2d 896, 905-906 (2d Cir. 1981) (internal citations omitted; citing Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932)).

Counts Eighteen through Twenty-Eight charge eleven different instances of false statements, each of which occurred on eleven distinct dates, each in violation of 18 U.S.C. § 1001. In order to obtain a conviction on each of Counts Eighteen through Twenty-Eight, the Government would have to prove that a separate and distinct false statement was made, in violation of 18 U.S.C. § 1001, on each of the dates alleged in the Indictment. Any of the Defendants could be convicted of one of the alleged violations yet be acquitted of another; thus, Counts Eighteen through Twenty-Eight are not multiplicitous. See United States v. Biaggi, 675 F. Supp. 790, 799-800 (S.D.N.Y. 1987) (multiple violations of same statute may be charged in multiple, separate, counts). Accordingly, Defendant Singh's motion to dismiss Counts Eighteen through Twenty-Eight is hereby DENIED.

b. Ex post facto

Defendant Singh also argues that Counts Eighteen through Twenty-Eight must be dismissed because they violate the ex post facto clause of the Constitution. U.S. Const. art. I, § 9. Singh argues that dismissal is necessary because 18 U.S.C. § 1001 was amended on October 11, 1996, and the Indictment charges Singh with violating 18 U.S.C. § 1001 before and after October 11, 1996, but only tracks the language of 18 U.S.C. § 1001 after its amendment.

Prior to October 11, 1996, the statute read, in pertinent part:

Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, . . . or makes or uses any false, fictitious or fraudulent statement or entry . . .

18 U.S.C. § 1001 (1976) (emphases added) (current version at 18 U.S.C. § 1001 (1999)). After amendment in October 11, 1996, ...


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