United States District Court, E.D. New York
May 4, 2004.
UNITED STATES OF AMERICA, -against- RW PROFESSIONAL LEASING SERVICES CORP., also known as "Professional Leasing Services," ROCHELLE BESSER, also known as "Rochelle Drayer," BARRY DRAYER, ROGER DRAYER, ADAM DRAYER, SUSAN COTTRELL, MYRNA KATZ, and STEPHEN BARKER, Defendants
The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
This case involves charges of conspiracy to commit bank fraud and
wire fraud and money laundering. Presently before the Court are the
following motions by RW Professional Leasing Services, Corp. ("PLS"), Rochelle Besser, Barry Drayer,
Roger Drayer, Adam Drayer, Susan Cottrell, and Stephen Barker
(collectively, the "defendants"): (1) to suppress documents obtained
directly by a confidential source referred to as "CS-1" in the
Government's search warrant application, and any evidence seized by the
Government from PLS's office; (2) to suppress Roger Drayer's post-arrest
statements; (3) to preclude evidence concerning the alleged fraudulent
loans obtained by PLS on behalf of Hospitality Services of Middle
Tennessee ("HSMT"); (4) to dismiss the indictment with respect to
defendant Adam Drayer, or alternatively, to sever his trial; (5) for the
production of all Brady and Giglio materials; (6) for an order directing
the Government to provide a bill of particulars; and (7) for an order
directing the Government to provide statements and the grand jury
testimony of PLS employees.
On or about April 2, 2003, along with Payaddi Shivashankar, the
defendants were indicted and charged with one count of conspiracy to
commit bank fraud and wire fraud, 18 U.S.C. § 371, five counts of
bank fraud, 18 U.S.C. § 1344, and one count of money laundering,
18 U.S.C. § 1986(h).
The following facts are taken from the superceding indictment
("indictment"). PLS maintained business locations in Island Park, New
York, and Wellesley, Massachusetts. The indictment charges, in relevant
part, that Rochelle Besser, Barry Drayer, Susan Cottrell, Roger Drayer,
and Roger Drayer's son Adam Drayer (collectively, the "PLS defendants") operated a medical equipment
financing company, in which they arranged financing for the leasing of
medical equipment by medical providers and supplied medical providers
with working capital loans. PLS obtained loans from financial
institutions for the purported purpose of purchasing medical equipment
that would be leased to medical providers. In many instances, the leases
and the medical equipment served as collateral for the loans.
The indictment charges that PLS devised a scheme to provide the
financial institutions with sham documentation creating the false
impression that the medical providers were leasing equipment from PLS and
that PLS issued phony equipment invoices directly to the medical
providers for payments due under the lease. The indictment further
charges that the PLS defendants, among other things: (1) intentionally
retained lease prepayments, rather than remitting them to the financial
institutions; (2) concealed prepayments and defaults by medical providers
by creating false checks that were designed to make it appear as though
the medical providers were continuing to make payments under the leases;
(3) fraudulently induced lenders to fund multiple loans on the basis of a
single lease; (4) obtained loans from lenders on the basis of leases that
had been cancelled by medical providers; (5) presented escrow agreements
to banks to induce them to fund loans, knowing that escrow accounts would
not be established and no funds would be held in escrow for the banks;
and (6) converted loan proceeds to PLS's own use. The indictment provides that, instead of establishing escrow accounts
for the leases being financed by the financial institutions as required
by the escrow agreements, PLS maintained one bank account that received
approximately $92 million in loan proceeds wired by the lending
institutions, and a second bank account known as the "E-Account," which
was used by PLS as an operating account to receive lease payments and
lease prepayments from the medical providers and for other purposes. The
bank account and the E-Account were maintained by PLS at the same
After the loan proceeds were wired into the first account, they were
transferred by PLS into the E-Account, where they were commingled with
lease payments and lease prepayments. Instead of using the loan proceeds
for the purchase of medical equipment, as PLS had promised to do, the PLS
defendants converted a substantial portion of the loan proceeds to their
own uses. In particular, the commingled funds were transferred by check
or wire from the E-Account to (1) pay financial obligations of PLS; (2)
make lease payments in order to conceal the medical providers' default
status from lenders; and (3) another account maintained by PLS in order
to disguise the proceeds and facilitate their conversions. The indictment
states that the PLS defendants fraudulently converted at least the sum of
$28 million. II. DISCUSSION
A. Motion to Suppress all Evidence obtained by "CS-1"
The defendants identify a confidential source ("CS-1") as former PLS
employee Frank Zambaras. They argue that Zambaras acted as a de facto
Government agent and that, therefore, all items seized by him and all
evidence derived from those items, including items seized pursuant to the
search warrant, should be suppressed. Alternatively, the defendants
request an evidentiary hearing to determine whether Zambaras acted as a
Government instrument or agent.
The Fourth Amendment provides that "the right of the people to be
secure in their persons, houses, papers, and effects, against
unreasonable searches and seizures, shall not be violated. . . ." U.S.
Const. amend. IV. It is well-settled that the "surreptitious search of
premises by a private party does not violate the Fourth Amendment" unless
such individual is acting as an instrument or agent of the government in
obtaining evidence. United States v. Bennett, 709 F.2d 803, 805
(2d Cir. 1983). The Supreme Court has made clear that it is "`immaterial'
whether the government originated the idea for a search or joined it
while it was in progress." United States v. Knoll,
16 F.3d 1313, 1320 (2d Cir. 1994) (quoting Lustig v. United States, 338 U.S. 74, 78-79, 93 L.Ed. 1819, 69 S.Ct. 1372 (1949)). If the
government "`was in it before the object of the search was completely
accomplished [by the private party, it] must be deemed to have
participated in it.'" Id. (quoting Lustig, 338 U.S.
at 78-79)). Thus, the critical issue is "the point in time when the
object of the search has been completed. If the object has been realized,
the government cannot later become a party to it. By the same token, it
may not expand the scope of an ongoing private search unless it has an
independent right to do so." Id.
An evidentiary hearing on a motion to suppress "ordinarily is required
if the moving papers are sufficiently definite, specific, and
nonconjectural to enable the court to conclude that contested issues of
fact going to the validity of the search are in question." United
States v. Pena, 961 F.2d 333, 339 (2d Cir. 1992) (citations and
quotations omitted). A defendant seeking a hearing on a suppression
motion bears the burden of showing the existence of disputed issues of
material fact. See Id. at 338. However, a district court is not
required to hold an evidentiary hearing if the defendant's "moving papers
did not state sufficient facts which, if proven, would have required the
granting of the relief requested." United States v. Culotta,
413 F.2d 1343, 1349 (2d Cir. 1969). Further, a court need not hold an
evidentiary hearing when the "defendant's allegations are general and
conclusory or are based on suspicion and conjecture." United States
v. Wallace, No. 97 CR 975, 1998 WL 10874, at *30 (S.D.N.Y. July 17,
1998) (citation omitted).
According to the defendants, the circumstances surrounding the recovery
of items by Zambaras from the PLS office "lead to the conclusion that the
FBI directed or at least encouraged the actions of Zambaras in his
surreptitious search and seizure of such items." The defendants point out that, in a June 20, 2002 complaint and
affidavit, Agent Rondie Peiscop-Grau stated that Zambaras "has been
supplying the [Government] with information and documents" about PLS's
operation since on or about June 13, 2002. Agent Peiscop-Grau further
stated that Zambaras provided a file "relating to OD-1, an optometrist
from California" and "four other files reflecting the defendants' rental
of boxes from Mail Boxes, Etc."
In addition, the defendants assert that a photocopy of a property
receipt reveals that Zambaras provided several items to the Government on
June 18, 2002, three days prior to the arrest of Barry Drayer, Rochelle
Besser and Roger Drayer. The defendants also contend that a photocopy of
a computer disk appears to show that, at some point, Zambaras provided
the Government with an actual computer disk containing copies of RW
checks. The defendants state that this disk was not generated by any of
the PLS defendants. Based on this, the defendants contend that the
computer disk and the other documents were seized by Zambaras without
PLS's authorization and with the knowledge of the Government.
Further, the defendants state that, on or about June 13, 2002, Zambaras
was terminated by PLS. Several days later, when Zambaras was no longer on
the payroll, several PLS employees observed him at the PLS office making
an "unusual" number of photocopies. In an April 1, 2004 supplemental
affidavit, Roger Drayer states that he saw Zambaras at the photocopy
machine for "several hours." According to the defendants, Zambaras was copying and stealing PLS files. Further, in a February
12, 2004 affidavit, Domenica Califano, another tenant in the building in
which PLS is located, asserts that Zambaras was observed on June 21, 2002
handing the FBI agents a computer disk and accompanying FBI agents, while
a search warrant was being executed inside the PLS office.
In response, the Government contends that there is nothing in Agent
Rondie-Grau's affidavit to suggest when, where, or how the documents
supplied by Zambaras were obtained. The Government further contends that
there is no evidence that the FBI directed or approved a private search
of PLS's office.
In the Court's view, the defendants have made a sufficient showing that
contested issues of fact exist regarding whether Zambaras was working on
behalf of the Government at the time he obtained documents. In sum, the
defendants contend that Zambaras was acting at the behest of the
Government, based on the following: (1) the language in the affidavit of
Agent Peiscop-Grau reveals that Zambaras provided the Government with
information and documents in the week preceding the search of the PLS
office on June 21, 2002; (2) Roger Drayer's observation regarding the
"unusual amount" of photocopying by Zambaras after the FBI met with him
on June 13, 2002; (3) the FBI receipt indicating Zambaras gave documents
to Agent Peiscop-Grau on June 18, 2002; (4) the copy of the computer disk
that had "PLS Checks" written upon it but was not generated by any of the
PLS defendants; and (5) the observations of an independent third-party witness that
Zambaras was actually assisting the FBI in the execution of the search
warrant. Based on these allegations, the Court finds that an evidentiary
hearing is necessary to determine whether there was Government
involvement in Zambaras's seizure of the documents. Accordingly, United
States Magistrate Judge Michael L. Orenstein is requested to conduct a
suppression hearing with regard to this issue at his earliest convenience
and report to the Court. The Court will defer its decision on this motion
until after the determination of the suppression hearing.
B. The Motion to Suppress Roger Drayer's Post-Arrest
1. As to Voluntariness
The defendants moves to suppress Roger Drayer's post-arrest statements
made on June 21, 2002, to FBI Agents Vincent Gerardi and Michael Lender,
which were memorialized by the agents in an FBI form 302. The defendants
argue that his statements should be suppressed on the grounds that (1)
they were involuntary; (2) they were obtained in violation of his Fifth
Amendment right to counsel; and (3) admitting the statements would
violate the Bruton rule.
The Fifth Amendment right against self-incrimination requires a court
to exclude from criminal proceedings involuntary statements produced by
government threats or coercion. Green v. Scully, 850 F.2d 894,
900 (2d Cir.), cert. denied, 488 U.S. 945, 102 L.Ed.2d 363,
109 S.Ct. 374 (1988). Because custodial interrogation is inherently
coercive, see Dickerson v. United States, 530 U.S. 428, 435,
147 L.Ed.2d 405, 120 S.Ct. 2326 (2000), law enforcement officers must provide
a suspect with Miranda warnings prior to interrogation to safeguard a
defendant's privilege against self incrimination. United States v.
Ramirez, 79 F.3d 298, 304 (2d Cir.), cert. denied,
519 U.S. 850, 136 L.Ed.2d 87, 117 S.Ct. 140 (1996). Interrogation "refers
not only to express questioning, but also to any words or actions on the
part of the police (other than those normally attendant to arrest and
custody) that the police should know are reasonably likely to elicit an
incriminating response from the suspect." Rhode Island v.
Innis, 446 U.S. 291, 301, 64 L.Ed.2d 297, 100 S.Ct. 1682 (1980).
To determine whether a defendant waived his Fifth Amendment rights, the
Court must decide whether the waiver was made with the "full awareness of
the right being waived and of the consequences of waiving that right,"
United States v. Jaswal, 47 F.3d 539, 542 (2d Cir. 1995), and
whether the confession or statement was the "product of a free and
deliberate choice rather than intimidation, coercion, or deception,"
Moran v. Burbine, 475 U.S. 412, 421, 89 L.Ed.2d 410, 106 So.
Ct. 1135 (1986). A defendant's confession or statement "must not be
extracted by any sort of threats or violence, nor obtained by any direct
or implied promises, however slight, nor by the exertion by any improper
influence." Malloy v. Hogan, 378 U.S. 1, 7, 12 L.Ed.2d 653,
84 S.Ct. 1489 (1964). Coercion may be found where a defendant's
statement is "obtained under circumstances that overbear the defendant's will at the time it is given. . . ." United
States v. Anderson, 926 F.2d 96, 99 (2d Cir. 1999). Whether a
statement is voluntarily made or a product of government coercion depends
on the totality of the circumstances. United States v. Gaines,
295 F.3d 293, 298 (2d Cir. 2002) (citing Tankleff v. Senkowski,
135 F.3d 235, 244-45 (2d Cir. 1998)).
Promises of leniency, without more, do not invalidate a Miranda waiver.
See United States v. Guarno, 819 F.2d 28, 31 (2d Cir.
1987). Although material misrepresentations based on unfulfillable or
other improper promises might overbear a defendant's will, see
United States v. Ruggles, 70 F.3d 262, 265 (2d Cir. 1995), "a
confession is not involuntary merely because the suspect was promised
leniency if he cooperated with law enforcement officials.'" United
States v. Bye, 919 F.2d 6, 9 (2d Cir. 1990) (quoting
Guarno, 819 F.2d at 31)). Thus, whether promises of leniency
for his children overbore the defendant's will in this case, thereby
rendering his waiver involuntary, depends on the promises made.
In the present case, the defendants apparently concede that Miranda
warnings were given. Rather, the defendants contend that Roger Drayer's
statements to the FBI agents were involuntary. As noted above, one of the
factors the Court must consider when determining whether a statement was
voluntarily made is whether the government agents know that their conduct
is reasonably likely to elicit an incriminating response from the
suspect. Rhode Island, 446 U.S. at 301. According to the defendants, when Roger Drayer was arrested, FBI agents
handcuffed him in front of his son, Adam Drayer, and warned Adam "you too
are a hair away from being arrested." Shortly thereafter, the agents
informed Roger Drayer that his daughter, Jennifer Tarantino, was also
going to be arrested that day. He was then transported to FBI
headquarters where he indicated that he would need an attorney. Before an
attorney was provided, the defendants contend that one of the FBI agents
"implied" that his children Adam Drayer and Jennifer Tarantino would go
to jail if he did not make a statement and tell them about PLS's
operation. Based on these circumstances, the defendants contend that
Roger Drayer was coerced to make a statement because of concern for his
In response, the Government denies that Roger Drayer's statement was
the product of coercion.
Any statements made to Roger Drayer by the FBI, asserts the Government,
were in the nature of permissible and truthful advice concerning his
The Court finds that disputed issues of fact exist regarding the
circumstances in which the Government obtained Roger Drayer's statements.
A defendant's statement that is induced by government threats to arrest
members of the suspect's family may render his statement involuntary.
See, e.g., Rogers v. Richmond, 365 U.S. 534, 544-48,
5 L.Ed.2d 760, 81 S.Ct. 735 (1961) (finding that a confession was coerced
because the defendant was told his wife would be taken in for questioning). In the
Court's view, the defendants have advanced enough facts to demonstrate
that disputed issues of fact exist regarding whether the agents exercised
undue psychological pressure on Roger Drayer so that his will was
overcome at the time he made his statements, thereby rendering his
statements involuntary. Because the parties dispute the circumstances
surrounding Roger Drayer's statements, the Court concludes that it cannot
decide the defendants' motion to suppress Roger Drayer's statements
without an evidentiary hearing. Accordingly, United States Magistrate
Judge Michael L. Orenstein is requested to conduct a suppression hearing
and report to the Court with regard to the issue of voluntariness.
2. As to his Invocation of his Right to Counsel
Next, the defendants argue that the statements by Roger Drayer should
be suppressed because they were elicited after he invoked his right to
counsel. After Roger Drayer was arrested, he was placed in an FBI vehicle
and driven to FBI headquarters. During the drive, one of the agents asked
him if he had an attorney, to which he responded that he "would want an
attorney appointed to me." According to the defendants, this amounted to
a Fifth Amendment invocation of counsel under Edwards v.
Arizona, 451 U.S. 477, 484-85, 68 L.Ed.2d 378, 101 S.Ct. 1880
On the other hand, the Government asserts that Roger Drayer's statement
regarding the appointment of counsel referred to his Sixth Amendment
right to have counsel appointed to defend him against the charges at issue. The Government contends
that the statement was in response to a routine inquiry by an FBI agent
who was seeking that information for purposes of his impending
arraignment. The Government also asserts that this response was viewed as
ambiguous and that, in any event, Roger Drayer voluntarily signed a
written waiver form and consented to be interviewed.
It is well-settled that a Sixth Amendment right to counsel attaches
only at or after the time that adversary judicial proceedings have been
initiated against the suspect, "`whether by way of formal charge,
preliminary hearing, indictment, information, or arraignment.'"
United States v. Smith, 778 F.2d 925, 931-32 (2d Cir. 1985)
(citing Kirby v. Illinois, 406 U.S. 682, 689, 32 L.Ed.2d 411,
92 S.Ct. 1877 (1972)). Here, the Court rejects the Government's argument
that Roger Drayer's statement that he wanted to have an attorney
appointed referred to his Sixth Amendment right. It is undisputed that
this statement was made immediately after his arrest but before
arraignment. The Second Circuit has held that the Sixth Amendment right
to counsel does not arise at the time of the arrest. Smith, 778
F.2d at 932. Because the period in question was before the commencement
of an adversary judicial proceeding, the Sixth Amendment is not
Rather, the issue turns on whether Roger Drayer's right to counsel
under the Fifth Amendment was violated. As previously stated, the Fifth
Amendment requires that, once a suspect is in custody and subject to
interrogation, government agents must apprise the suspect of his right to contact an attorney, and to have an
attorney present during questioning. Miranda v. Arizona,
384 U.S. 436, 467-71, 16 L.Ed.2d 694, 86 S.Ct. 1602 (1966). In
Edwards, the Supreme Court held that, once the right to counsel
is invoked, the interrogation must cease until counsel is present, unless
the suspect thereafter indicates a waiver by initiating further
communication with law enforcement. 451 U.S. at 484-85. A defendant may
invoke his right to counsel "in any manner and at any stage of the
process" that counsel is desired. Miranda, 384 U.S. at 444-45.
Invocation of the Fifth Amendment requires the suspect to make "some
statement that can reasonably be construed to be expression of a desire
for the assistance of an attorney in dealing with custodial interrogation
by the police." McNeil v. Wisconsin, 501 U.S. 171, 178,
115 L.Ed.2d 158, 111 S.Ct. 2204 (1991). Reference to an attorney that is
ambiguous or equivocal is insufficient to invoke the Fifth Amendment
right to cause law enforcement to cease their questioning. Davis v.
United States, 512 U.S. 452, 459, 129 L.Ed.2d 362, 114 S.Ct. 2350
(1994). In addition, the Court is mindful that it "must give a broad,
rather than a narrow, interpretation to a defendant's request for
counsel." United States v. Quiroz, 13 F.3d 505, 511 (2d Cir.
1993) (internal quotations and citation omitted). Indeed, any "doubts
must be resolved in favor of protecting the constitutional claim."
Michigan v. Jackson, 475 U.S. 625, 633, 89 L.Ed.2d 631,
106 S.Ct. 1404 (1986).
In this case, there is no dispute that Roger Drayer stated that he
"would want an attorney appointed for me." The Court finds that his statement was
an unambiguous and unequivocal assertion of his right to and need for
counsel. His statement was sufficient to put the FBI agents on notice
that he was requesting counsel and that, therefore, they were required to
refrain from questioning him until counsel was made available to him.
See Edwards, 451 U.S. at 484-85. Nevertheless, this rule does
not "foreclose finding a waiver of Fifth Amendment protections after
counsel has been requested, provided the accused has initiated the
conversation or discussion with the authorities." Minnick v.
Mississippi, 498 U.S. 146, 156, 112 L.Ed.2d 489, 111 S.Ct. 486
The parties dispute whether Roger Drayer voluntarily signed a written
waiver form and consented to be interviewed. Again, the defendants assert
that he was coerced to answer questions due to his concern for his
children. Because the parties dispute whether Roger Drayer voluntarily
waived his Fifth Amendment right to counsel, the Court will defer
decision on this issue, as it finds that a suppression hearing is
necessary. Accordingly, United States Magistrate Judge Michael L.
Orenstein is requested to conduct a suppression hearing and report to the
Court with regard to the waiver issue.
3. As to the Bruton Rule
Finally, the defendants argue that Roger Drayer's statements to the FBI
agents must be precluded pursuant to the rule in Bruton v. United
States, 391 U.S. 123, 126, 20 L.Ed.2d 476, 88 S.Ct. 1620 (1968).
In Bruton, the Supreme Court held that the government is prohibited from introducing a defendant's statement at trial if it
implicates a co-defendant in a joint trial because the co-defendant would
be denied his Sixth Amendment right to confront his accuser.
Id. at 128. The Supreme Court later limited the Bruton rule,
holding that the Sixth Amendment is not violated where a proper limiting
instruction is given to the jury not to consider the statement against
the non-declarant and the statement is redacted to eliminate the
co-defendant's name and any reference to his or her existence.
Richardson v. Marsh, 481 U.S. 200, 211, 95 L.Ed.2d 176,
107 S.Ct. 1702 (1987). The statement must be appropriately redacted so that
it does not in any way indicate the identity or existence of the deleted
co-defendant. Gray v. Maryland, 523 U.S. 185, 196,
118 S.Ct. 1151 (1998) ("we conclude that Richardson placed outside the
scope of Bruton's Rule those statements that incriminate inferentially");
see also United States v. Smith, 198 F.3d 377, 385
(2d Cir. 1999) ("In addition, the plea allocution was not incriminating
on its face because it did not directly implicate Smith. Therefore, we
find no violation of Gray.").
Here, the Government does not oppose redacting the statements as
provided by Bruton, Richardson, and Gray and does not
object to a limiting instruction being given to the jury regarding the
use of the statements. Nevertheless, the defendants argue that, because
this case involves a family business, there is no way to separate Roger
Drayer's statements from the accusation against his co-defendants. The
Government contends, and the Court agrees, that there is no rule barring
the admission of a defendant's inculpatory statement merely because some co-defendants are members of the defendant's
family. However, at this time, the Court declines to decide the potential
Bruton issues. Given the absence of a proposed redacted statement, the
Court is unable to determine whether, on its face, the redacted statement
sufficiently complies with the standards set forth in Bruton,
Richardson, and Gray. Therefore, the defendants' motion to
suppress Roger Drayer's statement on the ground that its admission would
allegedly violate the Bruton rule is denied without prejudice and with
leave to renew.
C. Motion to Suppress Evidence concerning HSMT
The defendants state that they have been charged with two counts of
conspiracy: conspiracy to commit bank fraud and wire fraud (count one)
and conspiracy to commit money laundering (count seven). The defendants
contend that there will be evidence presented at trial concerning a third
conspiracy. According to the defendants, this third conspiracy relates to
allegations concerning money funded to HSMT. The defendants assert that
Payaddi Shivashankar, an HSMT employee, is at the center of these
allegations. For example, the defendants state that, in the loan
applications, Shivashankar allegedly falsely represented that the money
was to be used to finance the purchase of medical equipment for HSMT and
that the indictment alleges that the HSMT loans contained forged
signatures of doctors. The defendants contend that the actions by
Shivashankar and the HSMT partners were undertaken independent of the PLS
defendants. The defendants further contend that there is no evidence that the PLS defendants were aware of the
forged signatures or any other misconduct on the part of Shivashankar or
any other principals or employees of HSMT. Because the indictment does
not charge this separate conspiracy, argue the defendants, all evidence
concerning the HSMT loans should be precluded at the trial.
The defendants' argument is without merit. As the Government properly
points out, whether the PLS defendants knew that Shivashankar or HSMT
principals or employees forged signatures in order to further the scheme
is immaterial. See United States v. Zichettello,
208 F.3d 72, 100 (2d Cir. 2000) ("There is no rule requiring the government
to prove that a conspirator knew of all criminal acts by insiders in
furtherance of the conspiracy."). In addition, the indictment here
charged one conspiracy to defraud financial institutions by obtaining
financing under false pretenses and describes a scheme in which the PLS
defendants and Shivashankar agreed to achieve that objective on behalf of
HSMT. Furthermore, even assuming proof of multiple conspiracies,
generally, this is a question of fact for the jury. United States v.
Vazquez, 113 F.3d 383, 386 (2d Cir. 1997). Accordingly, the
defendants' motion to suppress all the evidence concerning the HSMT loans
at trial is denied.
D. Motion to Dismiss the Indictment against Adam Drayer or to Sever his Trial
The defendants move to dismiss the indictment against Adam Drayer on
the ground that "there is insufficient evidence to connect Adam Drayer to
the conspiracy." Insufficiency of the evidence before a grand jury is an
insufficient ground to dismiss a facially valid indictment. See
United States v. Casamento, 887 F.2d 1141, 1182 (2d Cir. 1989)
("An indictment, if valid on its face, may not be challenged on the
ground that it is based on inadequate evidence.").
In addition, no defects in the indictment against Adam Drayer warrant
dismissal. An indictment need only track the language of the statute
charged and state the approximate time and place of the alleged crime.
See United States v. Pirro, 212 F.3d 86, 92 (2d Cir. 2000) ("We
have consistently upheld indictments that 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.") (internal quotations and
citations omitted). Because the indictment here more than satisfies these
requirements, the motion to dismiss the indictment against Adam Drayer is
In the alternative, pursuant to Rule 14 of the Federal Rules of
Criminal Procedure, the defendants argue that the Court should sever Adam
Drayer's trial from that of the remaining defendants because joint trials
of these offenses and these defendants would be severely prejudicial. In
particular, the defendants argue that, due to the familial relationships between Adam Drayer and his co-defendants and his minor role in the
alleged offenses, severance is necessary.
Rule 14 empowers a court to grant a severance "if it appears that a
defendant . . . is prejudiced by a joinder of . . . defendants . . . for
trial together. . . ." Fed.R.Crim.P. 14. A court should sever trials
of co-defendants under Rule 14 only if there is a serious risk that a
joint trial would compromise a specific trial right of one of the
defendants, or prevent the jury from making a reliable judgment about
guilt or lack of guilt. Zafiro v. United States, 506 U.S. 534,
539, 122 L.Ed.2d 317, 113 S.Ct. 933 (1993); United States v.
Rahman, 189 F.3d 88, 122 (2d Cir. 1999). Even if some prejudice is
shown, Rule 14 does not require severance. See United States v.
Haynes, 16 F.3d 29, 32 (2d Cir. 1994). Rather, "limiting
instructions often will suffice to cure any risk of prejudice."
Zafiro, 506 U.S. at 539.
The Court finds that severance is not necessary in this case. First,
"differences in degree of guilt and possibly degree of notoriety" of
defendants do not require that there be separate trials. United
States v. Aloi, 511 F.2d 585, 598 (2d Cir.), cert. denied,
423 U.S. 1015, 46 L.Ed.2d 386, 96 S.Ct. 447 (1975). Indeed, "differing
levels of culpability and proof are inevitable in any multi-defendant
trial and, standing alone, are insufficient grounds for separate trials."
United States v. Carson, 702 F.2d 351, 367 (2d Cir. 1983).
Second, there is no reason to conclude that a jury would be unable to
distinguish among family members in finding guilt or lack of guilt. Finally, even if the
Court severed Adam Drayer's trial from that of his co-defendants, much of
the evidence introduced in one trial to establish the conspiracy would be
introduced in the other. See United States v. Rosa,
11 F.3d 315, 341 (2d Cir. 1993) ("Evidence at the joint trial of alleged
co-conspirators that, because of the alleged conspiratorial nature of the
illegal activity, would have been admissible at a separate trial of the
moving defendant is neither spillover nor prejudicial."); United
States v. Muyet, 945 F. Supp. 586, 596 (S.D.N.Y. 1996) ("[E]ven if
the Court were to grant severance, much of the evidence regarding . . .
co-defendants' acts of violence would be admissible in . . . [their]
trial as proof of the existence and nature of the conspiracy.").
Moreover, to the extent that the evidence against one defendant may not
relate to another, the Court will either redact or issue limiting
instructions to cure any possible prejudice. Zafiro, 506 U.S.
at 539. Thus, the Court finds that the defendants have not demonstrated
the existence of a serious risk that a joint trial will compromise a
specific trial right or prevent the jury from making a reliable judgment
about guilt or lack of guilt. Id.; Rahman,
189 F.3d 122. Accordingly, the Court denies the motion by the defendants for
severance as to defendant Adam Drayer.
E. Motion to Produce Brady and Giglio Materials
The defendants move for the disclosure of all Brady and Giglio
materials. The Government acknowledges its duty to disclose exculpatory evidence
pursuant to Brady v. Maryland, 373 U.S. 83, 87,
10 L.Ed.2d 215, 83 S.Ct. 1194 (1963), and represents that it will disclose any
Brady materials when they become known. This representation by the
Government is a sufficient basis for denying an application to compel
disclosure under Brady.
In addition, the Government states that it will abide by its
obligations to disclose impeachment materials pursuant to Giglio v.
United States, 405 U.S. 150, 154-55, 31 L.Ed.2d 104, 92 S.Ct. 763
(1972). The Government further represents that it will disclose all
Giglio material three days prior to the trial. As there is no pre-trial
discovery right to Giglio materials, see United States v.
Nixon, 418 U.S. 683, 701, 41 L.Ed.2d 1039, 94 S.Ct. 3090 (1974),
the Court accepts the Government's representation that it will produce
such materials three days in advance of the trial. Accordingly, the Court
denies the defendants' motion seeking disclosure of all Brady and Giglio
F. Motion for a Bill of Particulars
Under Rule 7 of the Federal Rules of Criminal Procedure, a district
court "may direct the filing of a bill of particulars." Fed.R.Civ.P.
7(f). A bill of particulars enables a defendant "to identify with
sufficient particularity the nature of the charge pending against him,
thereby enabling the defendant to prepare for trial, to prevent surprise,
and to interpose a plea of double jeopardy should he be prosecuted a
second time for the same offense." United States v. Bortnovsky, 820 F.2d 572, 574 (2d Cir.
1987) (citations omitted). In the defendants' request for a bill of
particulars, they ask the Government, among other things, (1) to identify
which allegedly fraudulent schemes correspond to which loans; (2) to
explain how the loss figures were calculated; and (3) to state where the
Government believes the proceeds of the crimes were secreted or what
documents support the Government's case with respect to each individual
allegation for each loan.
To determine a motion for a bill of particulars, "`the important
question is whether the information sought is necessary, not whether it
is helpful.'" United States v. Amendolara, No. 01 CR 694, 2002
U.S. Dist. LEXIS 19981, at *12 (S.D.N.Y. Oct. 15, 2002) (quoting
United States v. Facciolo, 753 F. Supp. 449, 451 (S.D.N.Y.
1990)) The decision to grant a motion for a bill of particulars is within
the sound discretion of the district court. See United States v.
Walsh, 194 F.3d 37, 47 (2d Cir. 1999) (citation omitted). Where the
defendant is adequately informed of the charges against him, the
Government need not particularize all of its evidence. United States
v. Torres, 901 F.2d 205, 234 (2d Cir. 2000). "Acquisition of
evidentiary detail is not a function of a bill of particulars."
Id. Indeed, "[t]he proper scope and function of a bill of
particulars is not to obtain disclosure of evidence or witnesses to be
offered by the Government at trial. . . ." United States v.
Strawberry, 892 F. Supp. 519, 526 (S.D.N.Y. 1995) (citing
United States v. Salazar, 485 F.2d 1272, 1278 (2d Cir. 1973)). In this case, the Court finds that the indictment sufficiently informs
the defendants of the nature of the charges against them, namely a
conspiracy to commit bank and wire fraud and a conspiracy to commit money
laundering, thereby enabling them to prepare a defense in this trial.
Moreover, the Government supplied a letter to the defendants, dated
December 17, 2003, outlining the specific fraudulent loans that it
intends to refer to at the trial. The Court agrees with the Government
that the level of detail the defendants seek is neither required nor
necessary to enable them to prepare a defense and avoid unfair surprise
at the trial. Accordingly, the motion for a bill of particulars is
G. Motion to Provide all Statements and Grand Jury Testimony
of PLS Employees
The defendants request that the Court order the Government to produce
any statements of the defendants, including employees of PLS, in
accordance with Rule 16 of the Federal Rules of Criminal Procedure. In
particular, the defendants request the statements made by former employee
Zambaras. Rule 16 entitles the defendants to discovery materials that the
government intends to introduce at the trial or that is material to their
defense. Fed.R.Crim.P. 16(a)(1). The Government represents that it
will produce the statements of all prospective witnesses, including
Zambaras, three days prior to the trial. The Court has no basis to
conclude that the Government will do otherwise with regard to its
obligations under Rule 16. Accordingly, based on the Government's
assurance, the defendants' request to order production of Rule 16 materials is denied.
Based on the foregoing, it is hereby
ORDERED, that the defendants' motion to suppress documents
obtained by Frank Zambaras is DEFERRED, pending the outcome of
the suppression hearing; and it is further
ORDERED, that the motion to suppress the documents is
referred to United States Magistrate Judge Michael L. Orenstein, at his
earliest convenience, to conduct a suppression hearing and report to the
Court regarding whether Frank Zambaras was working as a government
instrument or agent; and it is further
ORDERED, that the defendants' motion to suppress Roger
Drayer's post-arrest statements made on June 21, 2002 to the FBI agents
is DEFERRED, pending the outcome of the suppression hearing;
and it is further
ORDERED, that the defendants' motion to suppress Roger
Drayer's post-arrest statements is referred to United States Magistrate
Judge Michael L. Orenstein to conduct a suppression hearing and report to
the Court at his earliest convenience; and it is further
ORDERED, that the defendants' motion to preclude Roger
Drayer's post-arrest statements based on the Bruton rule is
DENIED without prejudice and with leave to renew; and it is
ORDERED, that the defendants' motion to preclude evidence
concerning HSMT is DENIED; and it is further
ORDERED, that the defendants' motion to dismiss the
indictment with respect to defendant Adam Drayer or to sever his trial is
DENIED; and it is further
ORDERED, that the defendants' motion for a production of all
Brady and Giglio materials is DENIED on the condition stated;
and it is further
ORDERED, that the defendants' motion for an order directing
the Government to provide a bill of particulars is DENIED; and
it is further
ORDERED, that the defendants' motion for an order directing
the Government to provide the statements and the grand jury testimony of
PLS employees pursuant to Fed.R.Civ.P. 16 is DENIED on the
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