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United States v. Schlegel

November 16, 2009


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


Pending before the Court is Defendant Sandra Hatfield ("Hatfield") and Defendant David H. Brooks'("Brooks") motions to sever under Federal Rule of Criminal Procedure 14(a).


The facts of this case have been set forth in detail in numerous previous orders of this Court. In brief, Hatfield and Brooks (collectively, "Defendants") are charged with conspiracy to commit and substantive securities fraud, conspiracy to commit mail and wire fraud, mail fraud, wire fraud, conspiracy to obstruct justice, obstruction of justice, and conspiracy to defraud the United States. The Indictment separately charges Hatfield with three counts of insider trading and one count of tax evasion, and Brooks with six counts of insider trading, one count of making material misstatements to auditors, and two counts of filing false tax returns. On March 16, 2009, the Court severed the tax counts from the non-tax counts. On July 9, 2009, the Government filed a second Superseding Indictment charging Patricia Lennex with conspiracy to defraud the United States in connection with the severed tax counts.

Motion practice in this case has been extensive. On November 13, 2007, Defendant Hatfield filed a motion to sever her trial from co-defendant Brooks, which this Court denied on January 8, 2008. On May 27, 2008, Hatfield filed a second motion to sever renewing her earlier arguments and arguing that a joint trial would violate her Speedy Trial rights. Defendant Brooks filed a motion to sever on November 3, 2008 on the grounds that a joint trial would involve antagonistic defenses and would deprive Brooks of vital exculpatory evidence. On March 16, 2009, this Court denied Hatfield's motion to sever on speedy trial grounds, but reserved decision on Defendants' motions to sever to avoid prejudice. However, the Court now holds that Defendant Hatfield has not presented any new arguments or new facts to support her grounds for severance. Thus, the Court denies Defendant Hatfield's motion for severance for the reasons set forth in its January 8, 2008 Order, and for the reasons stated below, the Court denies Defendant Brooks' motion to sever.


I. Legal Standard

Rule 14 permits a district court to sever a trial if "it appears that a defendant or the government is prejudiced by a joinder." Fed. R. Crim. P. 14. "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) (internal quotation marks omitted). In the federal system, there is a preference for defendants who are indicted together to be tried together. United States v. Diaz, 176 F.3d 52, 102 (2d Cir. 1999) (citing to Zafiro v. United States, 506 U.S. 534, 537, 113 S.Ct. 933, 122 L.Ed. 2d 317 (1993). The Supreme Court has instructed that Rule 14 severance should be granted "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 innocence." Zafiro, 506 U.S. at 539.

II. Defendant's Arguments

Defendant Brooks argues that a joint trial would deprive him of essential exculpatory evidence from Defendant Hatfield and may result in antagonistic defenses. The Court finds that Defendant Brooks' arguments do not warrant severance.

A. Exculpatory Evidence

The Supreme Court has recognized that "a defendant might suffer prejudice if essential exculpatory evidence that would be available to a defendant tried alone were unavailable in a joint trial." Zafiro v. United States, 506 U.S. 534, 539, 113 S.Ct. 933, 122 L.Ed. 2d 317 (1993). In determining whether to grant severance based on a claim that a defendant would be deprived of vital exculpatory evidence at a joint trial, the Court must consider the following factors: "(1) the sufficiency of the showing that the co-defendant would testify at a severed trial and waive his Fifth Amendment privilege; (2) the degree to which the exculpatory testimony would be cumulative; (3) the counter arguments of judicial economy; and (4) the likelihood that the testimony would be subject to substantial, damaging impeachment." United States v. Finkelstein, 526 F.2d 517, 523-24 (2d Cir. 1975) (internal citations omitted).

As to factor one, the Court finds that Brooks has not shown that Defendant Hatfield would waive her Fifth Amendment rights and testify at a severed trial. "Given the fact that [Hatfield did not] plead[] guilty . . . it is unrealistic to think that a co-defendant would be any more willing to waive [her] constitutional privilege against self-incrimination when called as a witness at a separate trial than [she] would be willing to insist upon [her] privilege as a defendant not to take the stand." Finkelstein, 526 F.2d at 524. Brooks has not presented an affidavit from Hatfield indicating that Hatfield would be inclined to testify against Brooks, and the Court has not found any independent basis to support such a finding. Rather, as the Government pointed out, Hatfield consistently invoked her Fifth Amendment privilege at a May 17, 2006 SEC appearance when asked whether anyone with authority over her directed her to commit accounting fraud. There is no indication that Hatfield would behave differently at a severed trial.

Brooks' argument that Hatfield will testify if she is tried first is speculative. This argument is premised on an unfounded claim that Hatfield would no longer have any Fifth Amendment concerns if her trial proceeded first. Clearly, such an argument is incorrect. See United States v. Triumph Capital Group, Inc., 260 F. Supp. 2d 432, 443 (D. Conn. 2002) (noting that co-defendant's Fifth Amendment concerns would continue after his trial, particularly if the co-defendant "[was] convicted ...

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