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U.S. v. ARAKELIAN

September 6, 2005.

UNITED STATES OF AMERICA,
v.
ARTOUR ARAKELIAN, Defendant.



The opinion of the court was delivered by: ROBERT PATTERSON, Senior District Judge

OPINION AND ORDER

On July 10, 2003, defendant Artour Arakelian, by his newly retained counsel, Cheryl J. Sturm, Esq., moved for recusal pursuant to 28 U.S.C. § 455(a) in view of the Court's remarks on the record on May 18, 2005 and May 20, 2005. This motion is denied for the reasons stated below.

BACKGROUND

  Arakelian was indicted in a mail and wire fraud scheme in which customers of Lexington Royce & Associates ("Lexington Royce"), a corporation formed by Arakelian in the fall of 2003, were fleeced of their savings. From September 2003 to April 2004, Lexington Royce, through its telephone solicitation and written materials, held itself out as having a twenty-two-year history as a foreign exchange currency dealer. (Presentence Investigation Report, dated Feb. 16, 2005 ("PSR") ¶ 26.) Lexington Royce contacted potential customers and offered them the opportunity to invest in its "Managed Account Program," which it touted as a successful pooled fund by which retail investors could engage in foreign currency transactions. (PSR ¶ 24.) After receiving deposit checks from customers, Lexington Royce in actuality did not place the funds in the Managed Account Program, but transmitted the funds to foreign bank accounts or a second sham corporation called 65J, Inc. (PSR ¶¶ 28-29.) Arakelian operated Lexington Royce with a single secretary and an undisclosed sales force. (PSR ¶¶ 24-25.)

  Arakelian was arrested in April 14, 2004, when FBI agents executed a search warrant at Lexington Royce's offices. (PSR ¶ 31.) His initial counsel was Steven Statsinger, Esq., an experienced criminal defense attorney, who appeared for bail and presentment only. On the day of Arakelian's arrest, Magistrate Judge Douglas F. Eaton held a detention hearing and ordered that Arakelian be detained based on risk of flight. Magistrate Judge Eaton found that Arakelian came to the United States at age 16 in 1992, and that it was not clear whether he was a legal alien. He also found that the Government presented strong evidence that Arakelian obtained at least $2 million by operating a fraudulent foreign exchange company, that he had diverted $1.6 million of the company's funds, and that he probably had access to much of it. Magistrate Judge Eaton also indicated that Arakelian had told Pretrial Services that, prior to the summer of 2003, his only employment was as a deli clerk for six or seven years.

  Samuel Slone Weissman, Esq., entered his notice of appearance for Arakelian on April 29, 2004. After the original indictment was filed, Mr. Weissman appeared before this Court for the arraignment on May 13, 2004, at which time Arakelian pleaded not guilty to each of five counts and the Court denied Arakelian's renewed application for bail. The Court established the following schedule: the Government was to provide discovery by June 4, 2004; Arakelian had until June 18, 2004 to make motions; and the parties were to appear on June 29, 2004 for oral argument on any motions. After determination of Arakelian's motions on June 29, 2004, the Court set a trial date of September 27, 2004, and excluded time until July 29, 2004 to allow Arakelian to consider any motions arising out of the Supreme Court's decision in Blakely v. Washington, 542 U.S. 296 (2004).

  On September 9, 2004, the Court received a letter from Mr. Weissman dated September 7, 2004, requesting a trial adjournment. The letter explained that Richard Jasper, Esq., had been recently retained as co-counsel to assist Mr. Weissman at trial, and that Mr. Jasper's schedule did not permit him to become fully familiar with the case by the trial date. The Court denied the application as not sufficient to waive the Speedy Trial Act limitations or adjourn the trial.

  On September 13, 2004, Mr. Weissman filed a motion to suppress statements Arakelian made at the time of his arrest. On September 15, 2004, the Government filed a superseding indictment containing a conspiracy count and four counts of wire fraud. The superseding indictment also alleged, under Blakely, enhancements for losses of over $2.5 million, more than fifty victims, and "sophisticated means," on which the Government would be seeking a jury's determination beyond a reasonable doubt.

  On September 23, 2004, Arakelian pled not guilty to the superseding indictment. At that time, the Government advised that it planned to file a second superseding indictment which would include a forfeiture provision. Mr. Weissman moved to strike the third enhancement factor in the superseding indictment, "sophisticated means," stating that the superseding indictment, which pled that some of the money collected by Lexington Royce had been wired overseas, failed to adequately plead "sophisticated means." (9/23/04 Tr. at 8, 15-18.) The Court stated that, based on Mr. Weissman's account of what the evidence shows, the evidence in the case would be "pretty strong" and suggested that Arakelian should consider a plea. (Id. at 18-19.) Mr. Weissman then indicated that there had been plea negotiations, but that the Government was unwilling to agree to a sentencing computation with a loss amount of less than $2.5 million or fewer than fifty victims under U.S.S.G. § 2B1.1, and was asking for levels to be added for "sophisticated means" and a managerial role. The Court did not comment either favorably or unfavorably on the Government's positions. (Id. at 23-24.) The Court set a hearing for October 4, 2004 on the motion to strike the "sophisticated means" enhancement factor in the superseding indictment. It also confirmed its understanding that Mr. Weissman, not Mr. Jasper, was going to be trial counsel in the case. (Id. at 10-11.) The Court set September 30, 2004 for an arraignment on the forthcoming second superseding indictment, October 4, 2004 for argument and hearing of the defense motion to strike, and October 25, 2004 as a tentative trial date. (Id. at 9, 28-29.)

  On September 30, 2004, Arakelian pled not guilty to the second superseding indictment, which contained a conspiracy count, four counts of wire fraud, and five counts of mail fraud, as well as four enhancement factors (for loss of over $2.5 million, more than fifty victims, "sophisticated means," and a managerial or supervisory role) and forfeiture allegations.

  On October 4, 2004, the Government withdrew its opposition to Arakelian's motion to suppress statements he made at the time of his arrest, and the Court denied Arakelian's motion to strike the allegation of "sophisticated means" in the second superseding indictment. The parties also confirmed the October 25, 2004 trial date.

  At a conference on October 15, 2004, ten days before the scheduled trial date, the Government served its proposed voir dire questions and proposed jury charges. The Court then expressed its strong concern that Arakelian's trial counsel, Mr. Weissman, had not been before the Court in other cases and might not be familiar with federal criminal procedures and the effect the U.S. Sentencing Guidelines have in federal criminal proceedings, and stressed the necessity that counsel knowledgeable in these matters give Arakelian the benefit of its advice. (10/15/05 Tr. at 2-7.)

  On October 21, 2004, four days before the scheduled trial date, the Court called a conference to conduct an ex parte inquiry with Mr. Weissman and Mr. Jasper to determine whether there was a need for a hearing pursuant to United States v. Curcio, 680 F.2d 881 (2d Cir. 1982).*fn1 Messrs. Weissman and Jasper assured the Court that Arakelian's family, not a third party, was paying Arakelian's legal fees, and the Court announced in open court that it had determined that a Curcio hearing was unnecessary. Thereafter, Mr. Jasper informed the Court that he had been formally retained as Arakelian's trial counsel and he requested an adjournment in view of his increased responsibilities. The Court granted the request and set December 8, 2004 for trial.

  On November 22, 2004, Arakelian appeared before the Court and, after receiving a Pimentel letter from the Government, pleaded guilty to Counts One through Ten of the second superseding indictment, but not to the four enhancing factors. (11/22/04 Tr. at 16.) Arakelian stated under oath that no promises or assurances of any kind had been made to him to induce him to enter a plea of guilty, that he understood the maximum sentence applicable to the offense and that he could be deported as a result of his conviction, and that he had been advised by counsel as to how the Sentencing Guidelines might apply to his sentence. (Id. at 5.) He also agreed to forfeit any interest he had in ...


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