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United States v. Malizio

United States District Court, Second Circuit

October 15, 2013



HUGH B. SCOTT, Magistrate Judge.


Pending before the Court is a motion (Dkt. No. 121) by defendant Raymond Malizio for reconsideration of his detention status. Defendant has been in continuous federal custody since his arrest on May 5, 2013 in the Eastern District of New York. In support of reconsideration, defendant argues that his circumstances have changed with respect to the availability of a suitable residence. Specifically, defendant argues that he has a daughter-in-law in Florida who would be willing to host him in her apartment with her daughter and would be willing to sign what apparently would be a signature bond despite limited financial resources. Defendant combines the availability of a suitable residence with arguments that he played no more than a minor role in the alleged conspiracy and that, given his minor role, he should not have to remain in custody for the several years that this "mega case" likely will need to proceed to trial.

The Government opposes reconsideration for several reasons. The Government disputes defendant's effort to downplay the role that he allegedly played in the conspiracy, proffering that he was a salesman who interacted directly with investors and indicated through e-mail correspondence that he knew the fraudulent nature of the investments in question. The Government further notes that defendant visited the United States frequently while living abroad, until it unsealed the indictment; the sudden end to those visits after the unsealing suggests intent to avoid arrest. Finally, the Government objects to the tenuous nature of the proposed residence and defendant's ties to his daughter-in-law, especially given that the daughter-in-law does not even own the apartment that would be the residence. The United States Probation Office ("USPO") recommends continued detention.

The Court held a bail review hearing and follow-up status conferences on September 12, 19, and 24, 2013. For the reasons below, the Court denies defendant's motion.


This case concerns allegations that defendant and others ran a transatlantic telemarketing scam that duped more than 250 investors into buying restricted stock at unrestricted stock prices, for a total injury of over $5 million. The indictment, filed on April 17, 2012, contains numerous counts and forfeiture allegations against a total of 12 defendants, four of whom remain at large. Defendant appears only in Count One, in which the Government accuses him and others of conspiring to commit wire fraud in violation of 18 U.S.C. § 1349. The indictment contains numerous details about how the entire alleged scam operated, but the following information suffices as a brief summary:

The defendants procured nearly worthless restricted shares of over-the-counter penny stock, and sold that stock at inflated prices to investors through the boiler room located in Spain.
The defendants utilized a high pressure sales pitch made to investors containing false and fraudulent representations and omissions, including, among other things, not telling investors that the stock being sold was restricted stock; that the investors were directed to web sites which showed stock prices for freely traded stock, not the less valuable restricted stock actually provided; directing investors to look at fictitious and highly optimistic press releases which had been created for the boiler room in order to make the particular stock appear valuable.
After investors purchased the stock, defendants directed the investors to send their payment, by international wire, to bank accounts in Canada, the United States and elsewhere.
After receiving payments from the investors for the worthless stock, which in total amounted to more than $5, 000, 000, the defendants shared the profits from the conspiracy.

(Dkt. No. 1 at 7-8.) As for overt acts in furtherance of the conspiracy, the Government in the indictment asserts that defendant and others "made sales calls to investors to induce them to purchase shares of various stocks." ( Id. at 9.)

The Government needed over a year after the filing of the indictment to locate defendant and to bring him into federal custody. Prior to his arrest, defendant had not lived in the United States for a number of years. Defendant appears to have lived in Barcelona, Spain for approximately three years, from around 2005 through around 2008. Defendant appears to have told the USPO in the Eastern District of New York that he lived in Panama City, Panama with his fiancee for the five years preceding his arrest, which would place him in Panama approximately around 2008 into 2013. During his time in Spain and later in Panama, defendant visited the United States at least several times. None of defendant's visits post-dates the filing of the indictment on April 17, 2012. In fact, defendant allegedly called law enforcement officials on September 28, 2012 and mentioned, among other things, that he was aware of the indictment. During that communication and a subsequent communication with law enforcement on October 4, 2012, defendant refused to surrender voluntarily. Eventually, law enforcement found defendant in Panama and arranged for his expulsion from that country and for his return to the United States in May 2013. On May 5, 2013, defendant arrived at John F. Kennedy International Airport in New York City and was taken into custody. After proceedings in the Eastern District of New York pursuant to Rule 5(c) of the Federal Rules of Criminal Procedure, defendant appeared in this District for arraignment on May 23, 2013. On May 30, 2013, the Court held a detention hearing, during which defendant decided not to challenge the Government's motion because he had no residence in the United States. Defendant reserved the right to apply for a reconsideration of bail in the future. The Court reviewed the bail factors set forth in 18 U.S.C. § 3142(g) and ordered defendant detained as a flight risk.

Defendant filed the pending motion for reconsideration of bail on August 12, 2013. Primarily, defendant points to a change of circumstances in that he now has a residence in Florida that he can submit for consideration. Specifically, defendant wants to live with his daughter-in-law, Madeline Van Epps, and her daughter in their apartment in DeLand, Florida. The USPO has spoken with Ms. Van Epps by telephone. Ms. Van Epps is enlisted in the United States Coast Guard and is enrolled in an unspecified nursing program. Although she is absent from the apartment when discharging her Coast Guard duties and lacks financial resources to post bail, Ms. Van Epps apparently would be willing to host defendant and to sign a signature bond. The USPO in the Middle District of Florida would supervise defendant if the Court ordered release, though defendant apparently does not qualify for "courtesy supervision" in that district. How much communication defendant has had in the last 10 years with Ms. Van Epps and other family members is not clear; defendant appears to have maintained some communication with various family members, though tensions in the family over the years limited the communication. As for other factors related to reconsideration, defendant's fiancee in Panama never appeared to support defendant and has not been contacted or referenced in any proceedings. Defendant concedes that he has bipolar disorder and that he has maintained sobriety for 12 years; defendant concedes also that he has led what he described as an "interesting" life that includes numerous theft-related arrests and convictions in Pennsylvania between 1980 and 2001. Nonetheless, defendant asserts that some combination of conditions of release is possible here and that he will be able to find work in Florida. Defendant argues that ...

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