United States District Court, S.D. New York
ORDER AND OPINION
S. ROMAN, United States District Judge.
Joseph Scali ("Defendant") is charged in a
ten-count indictment with (1) mail fraud in violation of 18
U.S.C. § 1341; (2) structuring to evade currency
transaction reports in violation of 31 U.S.C. §
5342(a)(3); (3)- (4) false statements in violation of 18
U.S.C. § 1001; (5) corruptly endeavoring to obstruct and
impede the due administration of the Internal Revenue Laws in
violation of 26 U.S.C. § 7212(a); (6) tax evasion for
the year 2011 in violation of 26 U.S.C. § 7201; (7) tax
evasion for the year 2012 in violation of 26 U.S.C. §
7201; (8) obstruction of justice in violation of 18 U.S.C.
§ 1503; (9) perjury in violation of 18 U.S.C. §
1623; and (10) mail fraud in violation of 18 U.S.C. §
1341. (Second Superseding Indictment ("S2") 2, ECF
No. 80.) Before the Court is Defendant's Motion to
Dismiss the Indictment. (Decl. of Michael H. Sussman, Esq.,
Exh. 1 (Mem. of Law in Supp. of Def. Omnibus Mot. ("Def.
Mot.")), ECF No. 100.) For the following reasons,
Defendant's Motion is DENIED.
August 30, 2017, Defendant Scali was charged in a ten-count
Second Superseding Indictment. The Indictment stems from
three sets of actions concerning Defendant's law
practice. First, beginning in 2011, Defendant represented a
prospective seller of real estate, Harry Freed, doing
business as Opal Industries, Inc. ("Opal"), who
entered into a contract to sell two tracts of land in
Pennsylvania to a Prospective Buyer, Channel A Co.
("Channel A"). (S2 ¶ 5; Govt. Mem. of Law in
Resp. to Def. Omnibus Pre-Trial Motions ("Govt.
Mot.") 2, ECF No. 110.) During the course of the
negotiations, the prospective buyer signed a contract and
sent Defendant approximately $1.67 million toward the real
estate purchase to hold in escrow pending the closing of the
transaction. (S2 ¶ 5.) The prospective buyer sent
approximately $1.5 million of the funds via Federal Express,
and Defendant deposited those funds into his Attorney Trust
Account. (Id.) Negotiations, however, would soon
breakdown and the contract would not be consummated. (Govt.
Mot. 3; Def. Mot. 1-2.) Following the breakdown in
negotiations, the prospective buyer asked Defendant via
letter to return approximately half of the funds that he held
in escrow to the prospective buyer and to retain the balance
of the funds (approximately $850, 000) in escrow until the
buyer and seller entered into a new contract. (S2 ¶ 6.)
Defendant Scali obliged, and sent a letter with a check
comprising approximately half of the amount. (Id.
¶ 7.) Negotiations would deteriorate further and
terminate completely. In the aftermath, the prospective buyer
requested the return of the monies from Defendant.
Unbeknownst to the parties, however, Defendant Scali
allegedly used or distributed the remaining monies held in
escrow, (Id. ¶ 8-12.)
second set of actions pertains to grievance proceedings
conducted before the New York State and Southern District of
New York ("S.D.N. Y.") grievance committees. The
Government alleges that during the grievance proceedings
against the Defendant, the Defendant committed perjury when
he submitted an affidavit to the S.D.N.Y. Grievance Committee
(Id. ¶ 30-7) and also obstructed the due
administration of justice with respect to the disciplinary
proceedings against him. (Id. ¶ 26 29.)
Further, Defendant allegedly continued to hold himself out as
a licensed attorney after his license was suspended.
(Id. ¶ 32-34.)
third set of actions pertain to Defendant's tax filings.
The Government alleges that Defendant evaded taxes for the
years 2011 and 2012 (Id. ¶ 22-25) and committed
other tax-related offenses.
Scali now moves to dismiss the Second Superseding Indictment
in its entirety.
Younger v. Harris, 401 U.S. 37, 41 (1971) the
Supreme Court of the United States found that a federal
district court's order enjoining a state criminal
prosecution violated the "national policy forbidding
federal courts to stay or enjoin pending state court
proceedings except under special circumstances." In
doing so, the Court reiterated the long-standing "reason
for restraining courts of equity from interfering with
criminal prosecutions." Id. at 44. The Second
Circuit further explained that Younger abstention
"seeks to avoid federal court interference with ongoing
state criminal prosecutions, state-initiated civil
enforcement proceedings, and state civil proceedings that
involve the ability of state courts to perform their judicial
functions." Jones v. County of Westchester, 678
Fed App'x 48, 49-50 (2d Cir. 2017) (citing Sprint
Commc'ns, Inc. v. Jacobs, 134 S.Ct. 584, 591
(2013)). In sum, "federal courts must abstain from
exercising subject matter jurisdiction over federal
constitutional claims that involve or call into question
ongoing state proceedings." Wilson v. Emond,
373 Fed.App'x 98, 100 (2d Cir. 2010).
Scali asks this Court to invoke the Younger
abstention doctrine with respect to Count One and Ten (both
federal mail fraud charges), or in the alternative, grant a
Younger hearing. (Def. Mot. 13-14.) Defendant argues
that Counts One and Ten "wholly implicate violations
of New York State law [and] conduct within New York State
during proceedings that were initiated in and resolved in
state court" before proceedings on the merits took place
in federal court. (Id. at 14.) As a result,
Defendant asks the Court to exercise its discretion and apply
the Younger abstention doctrine.
Government argues that Younger "has absolutely
no relevance to this case." (Govt. Mot. at 8.) They
posit that Younger stands for the proposition that
"federal courts should not enjoin a state criminal
prosecution begun prior to the institution of the federal
suit except in very unusual situations." (Id.)
This case, they argue, unlike Younger, is not a
civil case brought in federal court to enjoin an)' state
court prosecution or proceedings. (Id. at 9.) As a
result, the Younger abstention doctrine is
"wholly inapplicable." (Id.)
these facts, the Younger abstention doctrine is
inapplicable, and the Court declines to grant a
Younger hearing. The Younger abstention
doctrine is implicated when a federal court exercises
jurisdiction over federal constitutional claims that involve
or call into question ongoing state proceedings.
Wilson, 373 Fed.App'x at 100. This is not the
case here. In this case, the federal government charged
Defendant Scali solely with federal crimes, and there are no
pending actions with which the prosecution would interfere.
Further, this Court is not being asked to enjoin any state
proceedings. See Younger, 401 U.S. at 41. Thus,
because the federal charges against the Defendant do not
implicate any state proceedings, the Younger
abstention doctrine is inapplicable and Defendant's
request for a Younger hearing is denied.
OF GRAND JURY PROCEEDINGS
may order disclosure of certain Grand Jury proceedings
"at the request of a defendant who shows that a ground
may exist to dismiss the indictment because of a matter that
occurred before the grand jury." Fed. R. Crim. P.
6(e)(3)(E)(ii). Disclosure of Grand Jury proceedings is
analyzed within the contours of "a long-established
policy that maintains the secrecy of the grand jury
proceedings in the federal courts." United States v.
Proctor & Gamble Co.,356 U.S. 677, 681 (1958). The
"indispensable secrecy" of Grand Jury proceedings
should not be broken except where compelling necessity
exists. Id. The Defendant must show "with
particularity" when such a need outweighs the
countervailing policy of secrecy. Id. In instances
where the need for disclosure outweighs the policy of
secrecy, such secrecy is ...