United States District Court, S.D. New York
October 10, 2005.
UNITED STATES OF AMERICA, Plaintiff,
THOMAS ALLAMON, ENRIQUE W. IGLESIAS, and T. GERALD CHILTON, JR., Defendants.
The opinion of the court was delivered by: JED RAKOFF, District Judge
OPINION AND ORDER
By Order dated October 1, 2005, the Court denied the various
motions of the remaining defendants Iglesias and Chilton for
severance and to dismiss Count Three for lack of venue.*fn1
This Opinion And Order reconfirms those rulings and briefly
states the reasons therefor.
The superseding indictment charges defendant Iglesias with wire
fraud and money laundering in connection with a scheme to purloin
Microsoft stock. A third count charges Iglesias and Chilton with
conspiracy to commit wire fraud in connection with an advance fee
scheme. Both defendants moved to sever Count Three from the other
counts on grounds of improper or prejudicial joinder. See
Fed.R.Crim.P., Rules 8 and 14. Alternatively, Chilton moved under
Rule 14 to sever his trial from that of Iglesias. Finally, both
defendants moved to dismiss Count Three for lack of venue.
As to Rule 8, severance in a multi-defendant case is assessed
according to the standard set forth in Rule 8(b), see United
States v. Turoff, 853 F.2d 1037, 1043-44 (2d Cir. 1988); United
States v. Papadakis, 510 F.2d 287, 299-300 (2d Cir. 1975), to
wit, whether the allegations stem from "the same series of acts
or transactions, constituting an offense or offenses." Under Rule
8(b), joinder is proper where the allegations are "unified by
some substantial identity of facts or participants" or "arise out
of a common plan or scheme." See also United States v.
Attanasio, 870 F.2d 809, 815 (2d Cir. 1989) (internal quotations
omitted). Here, there is a substantial identity of participants,
and a common fraudulent approach unifying the counts. Defendant
Iglesias and co-conspirator Thomas Allamon participated in both
schemes, see, e.g., United States v. Rittweger,
259 F. Supp. 2d 275, 284 (S.D.N.Y. 2003) ("This important overlap of two
out of the five named participants demonstrates a substantial
identity of participants in the two sets of counts and supports
joinder."), and while the schemes had different immediate
objects, they shared similar features overall. See, e.g.,
United States v. Saad, 380 F. Supp. 2d 286, 288 (S.D.N.Y.
2005). Thus, joinder was not improper.
As for Rule 14, under Rule 14(a) "[i]f the joinder of offenses
or defendants in an indictment, an information, or a
consolidation for trial appears to prejudice a defendant or the
government, the court may order separate trials of counts, sever
the defendants' trials, or provide any other relief that justice
requires." Fed.R.Crim.P. 14(a). However, where, as here,
joinder is proper, "a defendant who seeks separate trials under
Rule 14 carries a heavy burden of showing that joinder will result in
`substantial prejudice.'" United States v. Amato, 15 F.3d 230,
237 (2d Cir. 1994) (quoting Turoff, 853 F.2d at 1043).
Iglesias argues that if the counts remain joined, he will be
prejudiced because the Government's evidence on Count Three will
allegedly be much stronger than the evidence on the other counts.
However, the only reason he gives for this assertion is the fact
that Count Three embraces five separate advance fees, whereas the
other counts relate to a single transfer. But the mere fact that
more schemes or transfers are embraced by Count Three than by the
other counts does not necessarily render that count stronger, let
alone create the substantial prejudice warranting severance.
Indeed, the prejudice to Iglesias is effectively none, since,
even if Count Three were severed and the trial of that count
deferred, it is likely that the evidence of the advance fee
scheme set forth in Count Three would be admissible in the trial
of the Microsoft scheme to prove knowledge, intent, and the like
pursuant to Rule 404(b), Fed.R.Evid. When evidence of the
charge to be severed is otherwise admissible, there can be no
prejudice from joining the counts. See United States v. Lane,
474 U.S. 438 (1986); United States v. Tarricone, 996 F.2d 1414,
1422 (2d Cir. 1993); United States v. Afjehei, 869 F.2d 670,
674 (2d Cir. 1989).
Defendant Chilton's motion to sever Count Three so that he may
be tried separately from Iglesias must also be denied. Under Rule
14, "a district court should grant a . . . severance motion only when `there is a serious risk that a joint trial [of the two
defendants] would compromise a specific trial right of one of the
defendants, or prevent the jury from making a reliable judgment
about guilt or innocence." United States v. Feyrer,
333 F.3d 110, 114 (2d Cir. 2003) (quoting Zafiro v. United States,
506 U.S. 534, 539 (1993)). Here, Chilton has not identified a
specific trial right that would be compromised, and, given the
overall simplicity of the charges, there is no reason to believe
that the jury could not make a reliable judgment about individual
guilt or innocence. See United States v. Jackson, No.
90-cr-109, 1990 U.S. Dist. LEXIS 13148, *7 (S.D.N.Y. Oct. 5,
1990). While Chilton may not have been involved in the Microsoft
scheme, "[t]o the extent that evidence is admissible only against
other defendants, [he] has failed to show that proper limiting
instructions would not be adequate to protect his rights."
United States v. Vega, 309 F. Supp. 2d 609, 615 (S.D.N.Y.
2004); see also Jackson, 1990 U.S. Dist. LEXIS at *7.
In the end, the only motion that is even colorable is the
defendants' joint motion to dismiss Count Three the advance fee
conspiracy for lack of venue. To determine if venue is proper,
the court "must initially identify the conduct constituting the
offense (the nature of the crime) and then discern the location
of the commission of the criminal acts." United States v.
Rodriguez-Moreno, 526 U.S. 275, 279 (1999). Where an offense was
"begun in one district and completed in another . . . [it] may be
. . . prosecuted in any district in which such offense was begun,
continued, or completed." 18 U.S.C. § 3237; see also id. §
3237(a) (providing that "[a]ny offense involving the use of the mails, transportation in
interstate or foreign commerce . . . is a continuing offense and
. . . may be inquired of and prosecuted in any district from,
through, or into which such . . . mail matter . . . moves").
Here, the Government argues that venue in this District is
proper because the defendants executed their scheme in part by
generating interest in Iglesias' company, TMC Group, Ltd., by
posting false representations on its website that were thereby
conveyed to the Southern District of New York. Recently, the
Second Circuit applied similar reasoning in holding that a
defendant could be charged with advertising to receive child
pornography based on an Internet posting that appeared in the
Southern District of New York, even though the website was set up
elsewhere. United States v. Rowe, 414 F.3d 271, 277-80 (2d Cir.
2005). The Court found it irrelevant that the defendant "did not
intentionally transact business with a New Yorker . . . [because
the defendant] must have known or contemplated that the
advertisement would be transmitted . . . to anyone the whole
world over." Id. at 279 (internal quotations omitted).
Here, too, the defendants "must have known or contemplated that
[their website] would be transmitted . . . to anyone the whole
world over." Moreover, the defendants encouraged individuals the
whole world over to use their website to contact TMC Group Ltd.
about obtaining financing. Beneath an informational paragraph
about TMC Group's financing advisory services, the website
contained an active link viewers could use to fill out a request
form to have information sent to them via email. Thus, the defendants' reliance on civil
cases dealing with "passive" websites is misplaced. See,
e.g., Hsin Ten Enter. United States v. Clark Enters.,
138 F. Supp. 2d 449, 460 (S.D.N.Y. 2000). Moreover, the concerns about
forum shopping that understandably contribute to courts'
reluctance to base venue on passive websites in civil cases have
less relevance here in a criminal prosecution under federal law.
Finally, the Second Circuit applies a "substantial contacts"
test to ensure that "the two chief ills that the constitutional
venue provisions are meant to guard against bias and
inconvenience are not substantially present." See Rowe,
414 F.3d at 279-80; see also United States v. Ramirez, Nos.
03-1262-cr, 04-726-cr, 2005 U.S. App. LEXIS 18048, *22 (2d Cir.
Aug. 23, 2005). While this test can "take into account a number
of factors [such as] the site of the defendant's acts, the
elements and nature of the crime, the locus of the effect of the
criminal conduct, and the suitability of each district for
factfinding," Rowe, 414 F.3d at 278 (internal quotations
omitted), here, there is no reason to think that the values
underlying this test are in jeopardy, see Ramirez, 2005 U.S.
App. LEXIS at *22.
Accordingly, for the foregoing reasons, defendants' various
severance motions and their motion to dismiss Count Three for
lack of venue are denied. Counsel are reminded that trial of this
case will commence promptly at 9 a.m. on November 29, 2005.
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