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United States v. Reichman

United States District Court, S.D. New York

February 4, 2015

UNITED STATES OF AMERICA,
v.
WILBUR ANTHONY HUFF and ALLEN REICHMAN, Defendants.

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD, District Judge.

BACKGROUND

On November 27, 2012, defendants Huff and Reichman were charged in a thirteen-count indictment (the "Indictment") for counts that included charges of tax, bank, and wire fraud. According to the Indictment, Huff orchestrated several interrelated schemes to defraud, one of which Reichman joined, through which Huff unlawfully appropriated tens of millions of dollars from clients and financial institutions for his own benefit and Reichman benefited from increased commissions.

On September 15, 2014, Huff and Reichman submitted an omnibus pretrial motion in which they challenged the sufficiency of Counts One through Seven and Nine through Thirteen of the Indictment, moved to dismiss several counts as duplicitous or multiplicitous, moved to sever Counts One through Seven, moved to suppress wiretap recordings, moved to strike prejudicial surplusage, and moved for immediate disclosure of Brady/Giglio material and for a bill of particulars. After submitting an opposition to defendants' motions, the Government filed a superseding indictment that included new allegations with respect to Count Thirteen-the only count with which Reichman was charged. As a result, defendants withdrew their motion to dismiss Count Thirteen in order to bring a new motion directed to the altered charge, but continued to full briefing of the other motions.

The Court denied or reserved judgment on all the then-pending pretrial motions. Following our decision, the Government filed a second superseding indictment (the "Superseding Indictment"), which added four tax counts relating solely to Huff and did not substantively alter the allegations in Count Thirteen. Huff subsequently pled guilty to a superseding information and Reichman renewed his motion to dismiss the now-superseded Count Thirteen. On February 3, 2015, we held oral argument on that motion.

For the reasons set forth herein, the motion is denied.

DISCUSSION

I. Count Thirteen

Count Thirteen of the Superseding Indictment, the allegations of which we accept as true for purposes of the present motion, United States v. Goldberg, 756 F.2d 949, 950 (2d Cir. 1985), charges the defendants with conspiring to purchase Providence P&C, an Oklahoma licensed insurance company, in contravention of the Oklahoma Insurance Department ("OID") rules.

According to the Superseding Indictment, Huff-controlled entities owed in excess of $5 million to Providence P&C as a result of Huff's involvement in a separate scheme involving the failure to pay over insurance obligations. Id. ¶ 62. Consequently, in or about September 2009, Huff devised a scheme through which he and co-conspirators would purchase Providence P&C through a newly created entity, Park Avenue Insurance, for $37 million. Id. ¶ 63. To finance the acquisition, Huff and co-conspirators sought the assistance of Reichman, an Executive Director at an investment firm ("Oppenheimer"). Id. ¶ 64. Count Thirteen alleges that Reichman agreed to cause Oppenheimer to issue a $30 million loan to Park Avenue Insurance in order to purchase Providence P&C, using Providence P&C's own assets as collateral for the loan. Id. Reichman was allegedly warned by others at Oppenheimer on several occasions that this arrangement was unlawful and was told not to cause the loan to go forward; nevertheless, Reichman directed a co-conspirator to sign a letter providing false information regarding the loan's collateral, enabling and causing the loan to be issued. Id.

Huff and others then sought to purchase Providence P&C using the funds from the loan. However, Oklahoma state law required that the OID approve the purchase, and such approval would not have been forthcoming given the lack of external funds supporting the loan and sale. Id. ¶ 65. Thus, to secure approval, Huff and others concealed from the OID the true source of the transaction's funding-the loan facilitated by Reichman, backed by Providence's own assets-and instead falsely represented to the OID that Park Avenue Bank was funding the purchase. Id.

After the OID approved the sale and Park Avenue Insurance purchased Providence P&C on or about January 29, 2009, Huff and others allegedly pilfered the assets of the insurance company for personal use. Id. ¶¶ 66-67. Reichman is not alleged to have taken part in the looting of Providence P&C, but is alleged to have benefitted from the transaction by causing Providence P&C's $53 million bond portfolio to be transferred to Oppenheimer, from which he was able to receive hundreds of thousands of dollars in commissions. Id. ¶ 67.

Within ten months, in or about November 2009, the insurance company became insolvent and was placed in receivership, leaving state insurance guaranty associations to contribute millions of dollars toward satisfying policyholder claims. Id. ¶ 68. Based on these allegations, among others, Count Thirteen charges Reichman with conspiracy to commit wire fraud in violation 18 U.S.C. §§ 1343, 1349; specifically, it charges Reichman of conspiring with others "to defraud (i) the OID, as well as state insurance guaranty associations, policyholders, insurance companies and taxpayers, by making and causing to be made material misrepresentations and omissions regarding the source of the $37, 500, 000 used to purchase Providence P&C and (ii) the Investment Firm[, Oppenheimer, ] by making and causing to be made material misrepresentations and omissions regarding the $30, 000, 000 loan." Id. ¶ 69.

II. Timeliness

Reichman first seeks to dismiss the Superseding Indictment as untimely. The Superseding Indictment, which was returned on November 17, 2014, charges a conspiracy that continues into the five-year statutory period, "up to and including in or about November 2009, " id. ¶ 69. Nevertheless, Reichman argues that the Superseding Indictment should be dismissed as facially untimely, as it does not allege an overt act ...


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