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United States of America v. Christopher Finazzo and

August 24, 2011

UNITED STATES OF AMERICA
v.
CHRISTOPHER FINAZZO AND
DOUGLAS DEY, DEFENDANTS.



The opinion of the court was delivered by: Roslynn R. Mauskopf, United States District Judge:

MEMORANDUM AND ORDER

Christopher Finazzo and Douglas Dey ("Defendants") are charged by superseding indictment with twenty-eight counts, including: (i) conspiracy to commit mail fraud and wire fraud and conspiracy to violate the Travel Act (Count One); (ii) mail fraud (Counts Two through Fifteen); (iii) wire fraud (Counts Sixteen through Twenty-Six); (iv) money laundering conspiracy (Count Twenty-Seven); and (v) false statement in report required to be filed with the United States Securities and Exchange Commission (Count Twenty-Eight). (Doc. No. 44.) Defendants move to dismiss portions of Count One and the entirety of Counts Two through Twenty-Seven of the superseding indictment. (Doc. No. 49.) For the reasons set forth below, Defendants' motion is DENIED.

BACKGROUND

The original indictment, filed on June 8, 2010, charged Defendants with twenty-eight counts, including: (i) conspiracy to commit mail fraud and wire fraud and conspiracy to violate the Travel Act (Count One); (ii) mail fraud (Counts Two through Fifteen); (iii) wire fraud (Counts Sixteen through Twenty-Six); (iv) money laundering conspiracy (Count Twenty-Seven); and (v) false statement in report required to be filed with the United States Securities and Exchange Commission (Count Twenty-Eight). (Original Indictment (Doc. No. 1).) The original indictment described a "fraudulent scheme" in which Finazzo, an executive at the clothing retailer A©ropostale, secretly received approximately fifty percent of the profits from certain transactions between A©ropostale and South Bay, a clothing vendor controlled by Dey, in exchange for "caus[ing] A©ropostale to use South Bay as a vendor to purchase merchandise at rates that were less favorable to A©ropostale than the prevailing market rate." (Original Indictment at ¶ 7.) On October 19, 2010, Defendants moved for a bill of particulars that would require, inter alia, the Government to specify the transactions in which A©ropostale purchased merchandise from South Bay at "rates that were less favorable to A©ropostale than the prevailing market rate." (Doc. No. 37.) On December 8, 2010, this Court granted Defendants' motion.

On December 14, 2010, the Government filed a superseding indictment that alleges the fraudulent scheme in different terms, causing Defendants to "no longer require a bill of particulars." (Letter of Dec. 16, 2010 from Gov't to Defs. (Doc No. 45).) Specifically, the superseding indictment does not include an allegation that A©ropostale purchased merchandise from South Bay at rates that were "less favorable to A©ropostale than the prevailing market rate." (Original Indictment at ¶ 7.) Rather, the superseding indictment alleges that Defendants "deprived A©ropostale both of the opportunity to seek lower prices for merchandise it purchased from South Bay and the opportunity to purchase that merchandise from other vendors." (Superseding Indictment at ¶ 7.)

DISCUSSION

1. Sufficiency of the Superseding Indictment

Defendants argue that the superseding indictment must be dismissed because it "does not allege that A©ropostale was harmed through the deprivation of money or property or that either defendant made any misrepresentations relating to the value of the merchandise and services that South Bay sold to A©ropostale." (Defs.' Mem. in Supp. (Doc. No. 49-2) at 5.) As discussed below, these arguments are meritless. Defendants' motion misconstrues the fraudulent scheme alleged in the superseding indictment, and is based on the erroneous and baseless assumption that the Government has admitted to the existence of certain facts by filing a superseding indictment.

Under Federal Rule of Criminal Procedure 7(c)(1), an indictment need only track the language of the statute charged and state the time and place of the alleged crime. United States v. LaSpina, 299 F.3d 165, 177 (2d Cir. 2002) (citation omitted). "'[A]n indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense.'" United States v. Alfonso, 143 F.3d 772, 776 (2d Cir. 1998) (quoting Hamling v. United States, 418 U.S. 87, 117 (1974)). To be sufficient, "'an indictment need 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.'" Id. at 776 (quoting United States v. Stavroulakis, 952 F.2d 686, 693 (2d Cir. 1992)).

Under Federal Rules of Criminal Procedure 12(b), "[a] party may raise by pretrial motion any defense, objection, or request that the court can determine without a trial of the general issue." Fed. R. Crim. P. 12(b)(2). "The general issue in a criminal trial is, of course, whether the defendant is guilty of the offense charged." United States v. Doe, 63 F.3d 121, 125 (2d Cir. 1995) (citations omitted). Motions to dismiss indictments are disfavored. See, e.g., United States v. Bustos de la Pava, 268 F.3d 157, 165 (2d Cir. 2001) ("dismissal of an indictment is an extraordinary remedy reserved for extremely limited circumstances implicating fundamental rights" (citation and internal quotation marks omitted)).

Federal criminal procedure does not provide for pretrial determination of the sufficiency of the evidence: "[t]here is no federal criminal procedural mechanism that resembles a motion for summary judgment in the civil context." See, e.g., United States v. Yakou, 428 F.3d 241, 246 (D.C. Cir. 2005). Rule 12 was not intended to permit motions requiring consideration of facts outside the pleadings because, if that were allowed, the "pretrial motion could be turned into a trial of the general issue." 1A Charles Alan Wright & Andrew D. Leipold, Federal Practice and Procedure Criminal § 194 (4th ed. 2008). Thus, in the absence of a full proffer of the government's evidence, "the sufficiency of the evidence is not appropriately addressed on a pretrial motion to dismiss an indictment." Alfonso, 143 F.3d at 776--77 (reversing dismissal of indictment where district court "looked beyond the face of the indictment and drew inferences as to the proof that would be introduced by the government at trial" to satisfy an element of the charge). When there has been no such proffer, in deciding a motion to dismiss, the Court must consider only whether the allegations of the indictment, taken as true, are sufficient to establish a violation of the charged offense. United States v. Sampson, 371 U.S. 75, 78--79 (1962).

The Government must satisfy three elements to secure a conviction for mail fraud or wire fraud: (1) a scheme to defraud victims of (2) money or property, through the (3) use of the mails.*fn1 Fountain v. United States, 357 F.3d 250, 255 (2d Cir. 2004); United States v. Walker, 191 F.3d 326, 334 (2d Cir. 1999). The superseding indictment here is sufficient on its face. It sets forth a detailed description and the approximate time of Defendants' alleged wrongful acts; the fraudulent scheme allegedly took place between August 1996 and May 2010. (Superseding Indictment ¶ 7--10.) Tracking the language of 18 U.S.C. §§ 1341 and 1343, respectively, the superseding indictment states that Defendants' acts and mental states met the elements of the offenses set out. Defendants are sufficiently informed of the charges against them, and have adequate information to plead double jeopardy as a defense under the Fifth Amendment. Therefore, the superseding indictment is facially valid. See Alfonso, 143 F.3d at 776.

Defendants nevertheless argue that the superseding indictment should be dismissed because "no offense is stated" in the indictment, which, they claim, "does not allege that A©ropostale was harmed through the deprivation of money or property or that either defendant made any misrepresentations relating to the value of the goods and services that South Bay sold to A©ropostale." (Defs.' Mem. in Supp. at 5 (citing United States v. Aleynikov, 737 F. Supp. 2d 173, 176 (S.D.N.Y. 2010) ("Dismissal is required where the conduct alleged in the indictment as a factual basis for the offense is not actually prohibited by the language of the statute.")).

a.Actual or Contemplated Harm

As noted above, the three elements of mail fraud or wire fraud are (1) a scheme to defraud victims of (2) money or property, through the (3) use of the mails. Fountain, 357 F.3d at 255. "The first element focuses on the intent to harm; the second element is concerned with the precise nature of that harm, and requires that the harm be concrete." Walker, 191 F.3d at 335. The Government need not show that the intended victim was actually defrauded, and may rely on proof that Defendants contemplated some actual harm or injury to their ...


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