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U.S. v. NEKTALOV

United States District Court, S.D. New York


June 29, 2004.

UNITED STATES OF AMERICA,
v.
ROMAN NEKTALOV, Defendant.

The opinion of the court was delivered by: PETER LEISURE, District Judge

OPINION AND ORDER

The United States charges defendant Roman Nektalov with one count of conspiracy to launder monies in violation of 18 U.S.C. § 1956(h), and four counts of the substantive offense of money laundering in violation of 18 U.S.C. § 1956. The trial in this case is scheduled to begin July 12, 2004. Defendant now moves in limine for an order precluding the testimony of two expert witnesses proffered by the government. Defendant argues that the proffered testimony of the witnesses does not qualify as expert testimony under Rule 702 of the Federal Rules of Evidence, and the proffered testimony must be excluded under Rule 403 because its probative value is substantially outweighed by the danger of unfair prejudice. The government opposes defendant's motion. For the reasons set forth below, the Court denies defendant's motion.

Discussion

  According to the indictment, defendant and a co-conspirator ("CC-1") owned and operated Roman Jewelers, a jewelry business in New York, New York. The indictment charges defendant with conducting financial transactions with a cooperating witness ("CW") and an undercover law enforcement agent ("UC") by which defendant exchanged gold and diamonds for cash. The CW and UC represented to defendant that the cash constituted proceeds from narcotics trafficking, that they sought to exchange the cash for gold and diamonds, and that they intended to smuggle to Colombia the gold and diamonds purchased from defendant. The indictment charges defendant with engaging in the gold-for-cash and diamonds-for-cash transactions based on the understanding that the cash constituted proceeds from narcotics trafficking. The indictment charges that defendant, by engaging in such transactions, violated the federal statute criminalizing laundering of monetary instruments, 18 U.S.C. § 1956. The government has advised defendant that it intends to call two expert witnesses, Special Agent Brendan Clarke of the Internal Revenue Service and Cecilia Gardner of the Jewelers Vigilance Committee. According to the government, Special Agent Clarke would provide a basic description of the techniques used to launder drug proceeds, the regulatory framework that exists to combat this crime, and a description of some of the ways in which money launderers attempt to avoid this framework. Ms. Gardner would provide basic information on jewelry industry trade practices, including how members of the jewelry industry comply with anti-money laundering requirements. (Letter from Assistant United States Attorney Bret R. Williams, Esq., to the Court of 6/18/04, at 1-2 ("Gov't. Opposition").) The government states that it does not intend to ask either witness to give any opinions about whether the conduct in this case constitutes money laundering activity. (Id. at 5.)

  The purpose of a motion in limine is to allow the trial court to rule in advance of trial on the admissibility and relevance of certain forecasted evidence. See Luce v. United States, 469 U.S. 38, 41 n. 4 (1984). A motion in limine to preclude testimony calls on the court to make a preliminary determination on the admissibility of the testimony under Rule 104 of the Federal Rules of Evidence. Fed.R.Evid. 104(a) ("Preliminary questions concerning the qualification of a person to be a witness . . . or the admissibility of evidence shall be determined by the court. . . ."); Fed.R.Evid. 702 advisory committee's note ("[T]he admissibility of all expert testimony is governed by the principles of Rule 104(a)."); see Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 592 n. 10 (1993); Johnson Elec. North America, Inc. v. Mabuchi Motor America Corp., 103 F. Supp.2d 268, 279 (S.D.N.Y. 2000). The court's ruling regarding a motion in limine is "subject to change when the case unfolds, particularly if the actual testimony differs from what was contained in the . . . proffer." Luce, 469 U.S. at 41. Under Rule 104(a), the proponent of the proffered evidence "has the burden of establishing that the pertinent admissibility requirements are met by a preponderance of the evidence." Fed.R.Evid. 702 advisory committee's note; see Bourjaily v. United States, 483 U.S. 171, 175-76 (1987); Stone v. 866 3rd Next Generation Hotel, LLC, 99 Civ. 4780, 2002 WL 1046706, at *2 (S.D.N.Y. May 22, 2002). Once this Court makes a determination that expert testimony is admissible, the opponent of the evidence may challenge it through, among other things, cross-examination and presentation of contrary evidence. See, e.g., In re Joint Eastern & Southern District Asbestos Litigation, 52 F.3d 1124, 1132 (2d Cir. 1995). Ultimately the jury will consider what weight, if any, to give to the expert testimony. See Campbell v. Metropolitan Property & Casualty Ins. Co., 239 F.3d 179, 186 (2d Cir. 2001) ("[T]he weight of the evidence is a matter to be argued to the trier of fact. . . ."); Borawick v. Shay, 68 F.3d 597, 610 (2d Cir. 1995) ("[T]he Court [in Daubert] expressed its faith in the power of the adversary system to test shaky but admissible evidence." (internal quotations omitted)).

  I. Rule 702

  Defendant claims that the proffered expert testimony does not meet the requirements of Rule 702 of the Federal Rules of Evidence because it will not be helpful to the jury.

  Expert testimony is admissible when it "will assist the trier of fact to understand evidence or to determine a fact at issue." Fed.R.Evid. 702; see, e.g., United States v. Locascio, 6 F.3d 924, 936 (2d Cir. 1993); United States v. Scop, 846 F.2d 135, 140 (2d Cir. 1988). Expert testimony should be limited to situations in which the subject matter is beyond the ken of the average juror. See Locascio, 6 F.3d at 936; United States v. Castillo, 924 F.2d 1227, 1232 (2d Cir. 1991); Andrews v. Metro-North Commuter R.R. Co., 882 F.2d 705, 708 (2d Cir. 1989) (stating that expert testimony is not proper if it is regarding "matters which a jury is capable of understanding and deciding without the expert's help"). The Second Circuit has routinely upheld the admission of expert testimony offered by the government to explain the workings of criminal transactions and enterprises — such as narcotics trafficking, organized crime, and money laundering — that, without explanation, would be esoteric or otherwise beyond the understanding of the average juror. See United States v. Daccarett, 6 F.3d 37, 58 (2d Cir. 1993) (upholding admission of testimony from DEA agent about money laundering scheme and techniques); United States v. Tapia-Ortiz, 23 F.3d 738, 740-41 (1994) (upholding admission of expert testimony about operation of drug trafficking); United States v. Amuso, 21 F.3d 1251, 1263-64 (2d Cir. 1994) (upholding admission of testimony about "the existence and structure of New York crime families," because "the operational methods of organized crime families are still beyond the knowledge of the average citizen," and because the "testimony did not serve to bolster the testimony of the government's fact witnesses"); see also United States v. Cruz, 363 F.3d 187, 193 (2d Cir. 2004) ("[W]e have repeatedly upheld the use of expert testimony by government agents to describe the characteristics and operating methods of narcotics dealers." (internal quotation marks omitted)); United States v. Duncan, 42 F.3d 97, 100 (2d Cir. 1994) (upholding admission of testimony from an I.R.S. agent about the general functioning of the tax system where defendant argued at trial that he lacked knowledge and intent to make improper payments to government officials); United States v. Lombardozzi, S1 02 Cr. 273, 2003 WL 1907965, at *2-5 (S.D.N.Y. Apr. 17, 2003) (permitting expert background testimony on the organization and structure of crime families); United States v. All Funds on Deposit in Any Accounts Maintained at Merrill Lynch, Pierce, Fenner & Smith, 801 F. Supp. 984, 997-98 (E.D.N.Y. 1992) (Weinstein, J.) ("Sophisticated drug money-laundering activities, such as those relied upon by claimants, are a proper subject for expert testimony."). In United States v. Mulder, 273 F.3d 91, 102 (2d Cir. 2001), the Second Circuit concisely identified the parameters of such expert testimony. "The government is free both to offer expert testimony as background for an offense and to assist in proving one or more elements. What the government cannot do is to ask the jury to find that because criminals of a certain type classically engage in a certain kind of behavior, the defendant engaged in that kind of behavior." Id. The latter, impermissible purpose of expert testimony was rejected by the Second Circuit in, among other cases, United States v. Cruz, 981 F.2d 659 (2d Cir. 1992), and United States v. Castillo, 924 F.2d 1227 (2d Cir. 1991). In Cruz, the government offered expert testimony to describe "typical drug trafficking operations in the Washington Heights area." 981 F.2d at 660. The expert's testimony about typical drug trafficking operations mirrored the testimony about the conduct of the defendant in the case, thereby effectively bolstering the fact testimony. The Second Circuit found that the expert's testimony was inadmissible because its purpose conflicted with "the principle that the credibility of a fact-witness may not be bolstered by arguing that the witness's version of events is consistent with an expert's description of patterns of criminal conduct, at least where the witness's version is not attacked as improbable or ambiguous evidence of such conduct." Id., 981 F.2d at 663. Such bolstering testimony could prompt jurors to infer guilt from the conduct of unrelated persons, and "strongly suggests to the jury that [the expert law enforcement witness] believes the government's [fact] witness to be credible and the defendant to be guilty." Id.

  The decision to allow expert testimony is left to the discretion of the court, Locascio, 6 F.3d at 936; United States v. Tutino, 883 F.2d 1125, 1134 (2d Cir. 1989), and will not be overturned unless it is manifestly erroneous. Salem v. United States Lines Co., 370 U.S. 31, 35 (1962); United States v. Dukagjini, 326 F.3d 45, 52 (2d Cir. 2003); Bilzerian, 926 F.2d 1285, 1295 (2d Cir. 1991).

  Here, the proffered testimony of the government's witnesses appears by a preponderance of the evidence to qualify under Rule 702 as permissible expert testimony, and the Court therefore declines to grant defendant's in limine motion. The government proffers Agent Clarke's testimony to provide background about techniques used to launder drug proceeds. Agent Clarke would describe the regulatory framework that exists to combat money laundering, and would describe some of the ways money launderers attempt to avoid this framework, including how the purchase and smuggling of gold can be used to launder drug money so as to promote further narcotics trafficking. (Gov't. Opposition, at 5.) The proffered testimony of Agent Clarke more likely than not will assist the jury both in understanding the evidence and in determining the facts at issue, much like expert testimony admitted in other money laundering cases. See, e.g., All Funds on Deposit in Any Accounts Maintained at Merrill Lynch, Pierce, Fenner & Smith, 801 F. Supp. at 97. As the government points out, underlying unlawful activity such as drug trafficking, and defendant's knowledge of this activity, is an essential part of each of the elements of money laundering. See 3 L. Sand, et al., Modern Federal Jury Instructions, Instr. 50A-2 (2003). Agent Clarke's proffered testimony thus appears relevant, even though defendant is charged with money laundering and not drug trafficking. Agent Clarke's proffered testimony likewise appears helpful, as the techniques about which Agent Clarke will testify are not likely within the understanding of an average juror.

  Ms. Gardner's proffered testimony likewise appears by a preponderance of the evidence to qualify under Rule 702. Ms. Gardner would provide basic information on the use of kilogram quantities of fine gold, the procedures followed by the jewelry industry to identify customers who wish to purchase large quantities of gold, whether cash is commonly used to make such purchases, and how members of the jewelry industry comply with anti-money laundering requirements, including compliance with the requirement to file particular tax forms. (Gov't. Opposition, at 5.) As such, the proffered testimony of Ms. Gardner more likely than not will assist the jury by providing background for the offense charged. Furthermore, the basic information about which Ms. Gardner would testify is likely beyond the understanding of the average juror, who may not be familiar with customs and procedures involved in transactions for large quantities of gold.

  Defendant argues that Ms. Gardner's testimony is irrelevant because the elements of the crime in this case focus on defendant's state of mind, and she was not present at the transactions in question. While defendant is correct that knowledge and intent are elements of the crimes with which he is charged, defendant is incorrect in asserting that Ms. Gardner's testimony should not be admitted because she was not present at any of the transactions in question. Ms. Gardner, as an expert witness, need not have personal knowledge of the facts in this case to provide expert background testimony. See Mulder, 273 F.3d at 102. Rather, Ms. Gardner may give testimony about the jewelry industry generally which will assist the jury in determining whether defendant in this case acted with a culpable state of mind. Ms. Gardner's proffered testimony about gold transactions, therefore, offered as background to help the jury determine whether the government has proved the elements of money laundering with respect to this particular defendant, is permissible and appropriate under Rule 702.

  The Court notes that the proffered testimony of Agent Clarke and Ms. Gardner has some of the earmarks of the impermissible testimony rejected in Cruz and Castillo. The expert testimony in Cruz and Castillo about typical criminal activity mirrored the facts in those cases, and thus only served to bolster the government's case without providing information that would assist the jury. Here, however, the proffered expert testimony appears less specific than that offered in Cruz and Castillo, and thus less likely to mirror the fact testimony in this case. Cf. Tapia-Ortiz, 23 F.3d at 740 ("This case is different from the situations presented in Cruz and Castillo. [The expert witness here] did not give a narrative statement of a typical drug transaction that mirrored the testimony of the Government's fact-witnesses."). Because the government's proffered expert testimony here appears to be less specific than that in Cruz and Castillo, and because it will not include opinions about whether the defendant's conduct constitutes money laundering activity, the testimony lacks the dangers attendant to impermissible bolstering expert testimony. Here, the government's proffered expert testimony appears unlikely to prompt jurors to infer guilt from the conduct of unrelated persons, or to strongly suggest to the jury that Agent Clarke and Ms. Gardner believe that the government's fact witnesses are credible. See Cruz, 981 F.2d at 663.

  Moreover, the caveat set forth in Cruz, that such mirroring or bolstering expert testimony is inadmissible "at least where the [fact] witness's version is not attacked as improbable or ambiguous evidence of [criminal] conduct," 981 F.2d at 663, somewhat anticipates defendant's argument in this case, as defendant argues in his moving papers essentially that the fact testimony in this case provides only improbable or ambiguous evidence that defendant's conduct was criminal. (Letter from Christopher E. Chang, Esq., for the defendant to the Court of 6/17/04, at 3 ("[T]his case is very straightforward and calls upon the jury to decide a very simple question: did [defendant], a 74 year-old semi-retired jewelry merchant, who has never had any conflicts with the law and is a pillar of the community, engage in the transactions at issue believing that the monies paid by the confidential informant were the result of narcotics trafficking?").) Cf. United States v. Taylor, 18 F.3d 55, 60 (2d Cir. 1994) ("Because in this case [defendant] specifically disputed the government's claims that the gun found in his apartment was linked to his drug trafficking, admission of [expert] testimony contesting [defendant's] claims was admissible."). Thus while the proffered expert testimony in this case recalls to the Court the testimony offered in Cruz and Castillo, it appears to share little or none of the dangers of bolstering-type testimony identified by the Second Circuit in those cases.

  Lastly, as the government notes, Agent Clarke and Ms. Gardner have been qualified as experts in other cases in the Southern District of New York. See, e.g., United States v. Edwin Fernandez, 03 Cr. 973 (Patterson, J.) (Trial Transcript at 120, 199.)

  The Court therefore denies defendant's motion in limine to exclude the government's proffered expert testimony under Rule 702 because, on the current record, the government has shown by a preponderance of the evidence that the proffered expert testimony meets Rule 702's admissibility requirements.

  II. Rule 403

  Defendant claims that even if the proffered expert testimony is admissible under Rule 702, the Court must exclude it under Rule 403 because the probative value of each expert's testimony is substantially outweighed by the danger of unfair prejudice. "[E]ven if the testimony is admissible under Rule 702, it still must pass muster under Rule 403: Its probative value must not be substantially outweighed by unfair prejudice." Dukagjini, 326 F.3d at 54.

  The Court does not find at this time that any danger of unfair prejudice created by admitting the testimony of Agent Clarke and Ms. Gardner substantially outweighs the probative value of the testimony. Defendant argues essentially that admitting expert testimony that touches on narcotics trafficking will inflame the jury, and unnecessarily so because of the limited scope of the money laundering charges against defendant. (Letter from Christopher E. Chang, Esq., for the defendant to the Court of 6/10/04, at 3 ("Chang 6/10/04 Letter").) The Court disagrees for several reasons. First, defendant is charged with money laundering, the elements of which include transacting property constituting the proceeds of unlawful activity, in this case, narcotics trafficking. Thus, while testimony about narcotics trafficking may be prejudicial to defendant, such testimony is not necessarily unfairly prejudicial. Cf. Taylor, 18 F.3d at 60 (rejecting defendant's Rule 403 challenge to expert testimony about preferences of drug dealers for high-powered weapons because "the case itself dealt with whether firearms were involved in a drug trafficking offense [thus] the dangers of drug trafficking could not be far from the jurors' thoughts"). Second, the government's proffered expert testimony, in particular Agent Clarke's proffered testimony with which defendant takes issue on Rule 403 grounds, does not appear to include the "wild and shrill testimony of `Colombian drug lords'" attributed to it by defendant. (Chang 6/10/04 Letter, at 3.) Rather, the government states that Agent Clarke of the I.R.S. will, among other things, explain why international narcotics proceeds need to be laundered and how the purchase and smuggling of gold can be used to launder drug money so as to promote further narcotics trafficking. This limited examination into narcotics trafficking likely lacks the sweep and bombast anticipated by defendant. Cf. Dukagjini, 326 F.3d at 53 ("[T]his court has expressed discomfort about uncontrolled expert testimony that provides sweeping conclusions."). Rather, the emphasis of the government's proffer is on money laundering techniques and background, with mention of narcotics trafficking as necessary to explain these techniques and develop this background. Third, as the Court notes above, the probity of expert testimony that provides background information on sophisticated drug-money laundering techniques is apparent, as other courts have recognized. See Daccarett, 6 F.3d at 58; All Funds on Deposit in Any Accounts Maintained at Merrill Lynch, Pierce, Fenner & Smith, 801 F. Supp. at 97.

  As the probative value of the government's proffered expert testimony is not substantially outweighed by the danger of unfair prejudice, the Court declines to grant defendant's in limine motion seeking exclusion of the expert testimony under Rule 403.

  Defendant's motion therefore is denied, as the Court preliminarily finds that Agent Clarke and Ms. Gardner's proffered testimony is admissible under Rules 403 and 702 of the Federal Rules of Evidence. The government has shown by a preponderance of the evidence that, on the current record, the proffered expert testimony meets the admissibility requirements of Rules 403 and 702 of the Federal Rules of Evidence. The Court's in limine ruling is, of course, "subject to change when the case unfolds, particularly if the actual testimony differs from what was contained in the . . . proffer." Luce, 469 U.S. at 41; see Dukagjini, 326 F.3d at 55 (finding that while the district court properly established initial limits on the expert's testimony, its failure to enforce those limits during the trial constituted error).

  Conclusion

  For the reasons set forth above, the Court denies defendant's motion in limine to preclude the government's proffered expert testimony.

 

SO ORDERED.
20040629

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