Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

The United States Supreme Court has sped up the clock in criminal cases with consequences for how attorneys practicing federal criminal law will practice in the future. The Speedy Trial Act of 1974, 18 United States Code Section 3161 et seq., requires that the trial of a criminal defendant begin within 70 days of the date he is charged or makes an initial appearance, whichever is later. The Act, however, contains numerous periods of delay which are not counted when computing the 70 day time frame. Some of the periods of delay are “automatically” excluded from the 70 day time period, and are contained in Section 3161(h)(1). Other periods are only excludable if the district court makes specific findings, pursuant to Section 3161(h)(7), which provides that certain time periods “may” be excludable if the judge finds that “the ends of justice served by taking such action outweigh the best interest of the public and the defendant in a speedy trial,”

One of the “automatic” exclusions is for “(D) delay resulting from any pretrial motion, from the filing of the motion through the conclusion of the hearing on, or other prompt disposition of, such motion…” 18 United States Code Section 3161(h)(1)(D). Courts traditionally read this provision to include additional time granted to defendants to file pretrial motions. Yesterday, however, the Supreme Court issued its opinion, authored by Justice Clarence Thomas, in Bloate v. U.S., No. 08–728, available here, in which the majority held that “delay resulting from pretrial motions is automatically excludable, i.e., excludable without district court findings, only from the time a motion is filed through the hearing or disposition point specified in the subparagraph, and that other periods of pretrial motion-related delay are excludable only when accompanied by district court findings.” (Emphasis in original).

Counsel for Bloate, who was indicted for possession of cocaine, had obtained an approximately one month extension of time to file pretrial motions, and subsequently filed a motion to dismiss the indictment for Speedy Trial Act violations. The district court held that the extension to file pretrial motions was excludable under Section 3161(h)(1)(D) and the Eighth Circuit Court of Appeals affirmed his conviction, however the Supreme Court reversed and remanded. The majority responded to criticisms by dissenting Justices Samuel Alito and Steven Breyer that its holding would force district courts to choose between denying requests for additional time to file pretrial motions and potential dismissal of the indictment, noting that courts may make specific findings that the time is excludable from the Speedy Trial computation under Section 3161(h)(7), and that, even if the indictment is dismissed without prejudice, the government may still re-indict the defendant.

Most criminal cases already move quickly precisely because of the Speedy Trial Act. Conversely, the cases may be complex, preparation of effective pretrial motions may require substantial time and criminal lawyers may be occupied on other cases. Extensions of time to file pretrial motions are a frequently sought remedy. In view of the Court’s holding in Bloate, practitioners now must consider the implications under the Speedy Trial Act in requesting necessary extensions of time. Lawyers will have to consider how any proposed extension should be excludable from the Speedy Trial clock in the interest of justice, and may be forced to agree or stipulate that any extension will be excludable.

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As reported by the Macon Telegraph, on Friday the Georgia Court of Appeals reversed a ruling of the Superior Court of Bibb County, Georgia, dismissing Racketeer Influenced and Corrupt Organization (RICO) charges against Jimmy Collins, the former pastor of God's Worship Center (GWC), near Macon, Georgia, and Steven Pittman, a former employee of BB&T Bank. Collins and Pittman were alleged to have fraudulently induced church members into taking out more than $600,000 worth of loans.

Superior Court Judge S. Phillip Brown had dismissed the indictment against Collins and Pittman last July, finding that the State's indictment was not specific enough in alleging the RICO violations. However, the Court of Appeals held that the indictment contained sufficient detail, including a list of specific loan transactions.

Collins and Pittman are alleged to have used Pittman's position as a bank officer to obtain loans and lines of credit for approximately 10 members of Collins' church between 2002 and 2008. Collins allegedly requested that the church members "assist" the church by taking out personal loans, allegedly telling them that they would have no personal risk because the church would be responsible for repaying the loans. Collins is alleged to have targeted church members lacking in "sophistication," allegedly telling them that it was their "Christian duty." Collins and Pittman also allegedly forged documents, provided false financial information regarding the members and falsely represented the intended use of the loan funds. One couple incurred more than $350,000 worth of debt, and claimed that Collins and Pittman executed at least two loans without their knowledge.

Church members filed five civil suits against Collins, Pittman and BB&T. BB&T reached a confidential settlement with the plaintiffs and the claims against it were dismissed.

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As reported by Law.com, Bruce Karatz, Chief Executive Officers of KB Home, a home construction corporation based in Los Angeles, California, was indicted in the action of U.S. v. Nicholas, 2:09-cr-00203-ODW (C.D.Ca. 2009), on 20 counts of fraud for defrauding the company and its shareholders of millions of dollars in undisclosed backdated stock option over a period of seven years, and concealing the fraud from KB Home's  directors, compensation committee and shareholders. Karatz's trial in the U.S. District Court for the Central District of California is scheduled to begin on February 23.

Karatz's attorneys have requested a hearing regarding whether prosecutorial misconduct has tainted the government's case against Karatz. Karatz contends that two witnesses for the government--James Johnson, former Chairman of the Board of Directors' Compensation Committee for KB Home, and Gary Ray, former Vice President of Human Resources--initially believed that the stock options grant practice was lawful, but changed their position following contacts with the prosecution. Karatz's lawyers want to examine Johnson regarding why he denied allegedly defending KB Home's option granting process during an internal investigation by the company's outside counsel in his statements to prosecutors. 

The defense also wants to question Ray, who has pled guilty to obstruction of justice and is cooperating with the government, regarding why he had allegedly previously maintained that the process was "lawful and proper." Following is a link to

.

Karatz's motion is based on an order in December by U.S. District Judge Cormac Carney in the action of U.S. v. Nicholas, SACR 08-00139 CJC (C.D.Ca. 2008), another backdating case, in which the Court dismissed the government's indictment against co-founder of Broadcom Corp., Henry Nicholas, and former Broadcom Chief Financial Officer William Ruehle, blasting the prosecution for "distorting the truth-finding process" by intimidating and improperly influencing key witnesses. Karatz also relies on the Ninth Circuit Court of Appeals' overturning last August of the conviction of former Chief Executive Officer for Brocade Communication Systems, Inc., Gregory Reyes, for backdating based on false statements by the prosecution in closing arguments that Brocade's finance department didn't know about backdating. A hearing on Karatz's motion has been scheduled for February 8.

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Georgia leads the nation in bank failures this decade, with 32 failed banks since 2002, 25 of those in 2009 alone, according to the Federal Deposit Insurance Corporation (FDIC). Fraud has undoubtedly played a substantial role in the failure of many of these banks, and the FDIC and other agencies are especially vigilant in detecting and prosecuting fraud in the wake of bank failures.

Brent Merriel of Atlanta, Georgia, was indicted last week in the U.S. District Court for the Northern District of Georgia on four counts of aggravated identity theft and two counts of making false statements to the FDIC as announced by the U.S. Attorney's Office for the Northern District of Georgia. Merriel is alleged to have obtained several million worth of loans on properties in his name and the names of family and friends from Omni National Bank (Omni). Omni failed on March 27, 2009, and was taken over by the FDIC. Merriel then asked the FDIC to forgive $2.2 million in loans and to allow him to make a "short sale" of two properties to purchasers. A short sale is a sale of a property for less than the full amount due or owed, which serves to reduce a lender's losses or assist the property owner. However, in Merriel's case, the alleged purchasers were allegedly persons whose identities had been stolen. Merriel is also alleged to have forged sales contracts and loan commitment letters which he submitted to the FDIC.

The release notes that other individuals have been prosecuted relating to Omni, including Mark Anthony McBride, who fraudulently obtained millions in mortgage loans from Omni and other lenders and who pled guilty last April, and Delroy Oliver Davy, who similarly obtained millions in fraudulent loans from Omni and others. It quotes FDIC Office of Inspector General, Southeast Region Special Agent In Charge C. Ed Slagle as stating that FDIC will aggressively investigate and prosecute fraudulent acts uncovered in the FDIC's process of liquidating assets of failed banks in order maximize recoveries. The release also quotes Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Neil Barofski, Department of Housing and Urban Development Inspector General Kenneth M. Donohue and U.S. Postal Inspector in Charge, Atlanta Division Martin D. Phanco on fraud and enforcement.

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Raj Rajaratnam and Danielle Chiesi were indicted in indictment alleging 17 counts of securities and wire fraud on Tuesday in the U.S. District Court for the Southern District of New York, U.S. v. Raj Rajaratnam et al, Case No. 09-2306, as reported by the New York Daily News here, here and here, and the New York Times here, here and here. Rajaratnam is a former Bear Stearns hedge fund manager and is the founder of Galleon Management LP, which managed some $3.7 billion in funds. Rajaratnam, a U.S. citizen born in Sri Lanka, was arrested on October 16 at his Manhattan home. U.S. Magistrate Judge Douglas Eaton set Rajaratnam's bail at $100 million which Rajaratnam posted. The indictment alleges a multi-million dollar insider trading scheme that spanned from coast to coast, in which Rajaratnam and Chiesi shared tips on companies like Google, Advanced Micro Devices, Hilton Hotels and others, and reaped more than $20 million in illicit profits by trading on the confidential information. Rajaratnam and Chiesi have both pled not guilty and are fighting the charges. The government claims to have numerous recorded telephone conversations from cooperating witnesses in support of the charges.

Rajaratnam's attorneys also requested a second time that his bail amount be reduced to $20 million. His lawyers disputed the government's reliance on Roomy Khan, an Intel Corp employee and former trader who was convicted of wire fraud in California in 2002 for passing confidential information to Galleon and Rajaratnam when she was an employee of Intel, and who is cooperating with the government. Half a dozen persons, including Ms. Khan, are cooperating in the case.

The U.S. Securities and Exchange Commission has also filed civil charges against Rajaratnam. Following Rajaratnam's arrest, investors withdrew more than $4 billion from various Galleon hedge funds, and the firm ceased operations.

The investigation has implicated 21 individuals, including 14 hedge fund managers, lawyers and other investors who were arrested in November. Robert Moffat, a senior official at I.B.M., Rajiv Goel, an executive of Intel; and Anil Kumar, an executive at the consulting firm McKinsey & Company, were arrested at the same time as Rajaratnam, but have not yet been indicted. The Court has granted the prosecution an extension of 30 more days to indict these individuals. The prosecution has described the case as the largest insider trading case in history.

Attorney Brien Santarlas, of the New York law firm of Ropes & Gray, pled guilty to conspiracy to commit securities fraud and wire fraud this week. Santarlas admitted that, from June 2007 to May 2008, he and another attorney, Arthur Cutillo, also with Ropes & Gray, used confidential information regarding acquisitions by 3Com, Inc., and Axcan Pharma, Inc. Bain Capital Partners LLC, a Ropes & Gray client, had announced it planned to acquire 3Com on September 27, 2007, in a deal which would have also involved China's Huawei Technologies Co Ltd. A U.S. government security panel rejected the deal, however. 3Com is now in the process of being purchased by Hewlett-Packard Co. Another Ropes & Gray client, TPG Capital LP, announced on November 29, 2007 that it was acquiring Axcan Pharma.Prosecutors charged Santarlas, Cutillo, Jason Goldfarb and Zvi Goffer with causing trades of 3Com and Axcan stock before the public announcements, making approximately $20 million in profits.Santarlas also faces civil charges by the SEC. His sentencing is tentatively scheduled for June 1. Cutillo was indicted in November.

Rajaratnam has also been linked to Steven Cohen, manager of SAC Capital Advisors, a hedge fund, major art collector, and with a $6 billion net worth, the 36th richest person in America. Cohen's ex-wife, Patricia Cohen, filed a lawsuit in Federal court on Wednesday alleging that Cohen had hid money during their divorce 20 years ago and asserting civil RICO claims. The former Mrs. Cohen alleges that Cohen had made millions from insider trading in the 1980s and had hid the money with the help of one of his real estate partners. Specifically, she claims that Cohen received an insider tip prior to General Electric's purchase of RCA in 1985. She is seeking $300 million from Cohen. SAC issued a statement criticizing the former Mrs. Cohen and her attorney, calling the allegations in the lawsuit "ludicrous" and "without merit."

Federal prosecutors on Wednesday asked for 30 more days to indict four defendants tied to the Galleon Group insider trading scheme, one day after two of the main players were formally indicted on conspiracy and fraud charges.

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Sir Robert Allen Stanford entered a plea of not guilty yesterday to the indictment charging him with alleged defrauding investors in a $7 billion Ponzi scheme. U.S. Magistrate Judge Frances Stacy presided over the arraignment in the U.S. District Court for the Southern District of Texas in Houston.

Also yesterday, Stanford's co-defendant and alleged co-conspirator, Leroy King, a former official with Antigua and Barbuda's Financial Services Regulatory Commission, was arrested in Antigua. King is in custody pending a potential extradition request to the United States.

Stanford remains in custody. Magistrate Judge Stacy told the parties yesterday that she intended to order Stanford released on $500,000 bond, but that she would reserve her ruling until today to give the government time to appeal her decision. Assistant United States Attorney Paul Pelletier argued that there are no set of conditions which would guarantee Stanford's appearance at trial. The Government has filed a Memorandum in Support of Detention, arguing that Stanford should be denied bond based on the fact that he has a motive to flee, as well as the means and opportunity, noting, among other things, that Stanford's passport shows that he has traveled to over 30 foreign countries, and entered Antigua over 40 times in 2008. The defense filed a Memorandum in Support of Standford's Right to Pretrial Release on Wednesday, arguing that Standford is not a flight risk and that Stanford is required to be released on his own recognizance or an appearance bond under 18 United States Code section 3142. The memorandum cites the fact that Stanford voluntarily surrendered his passport to the Government after the Securities and Exchange Commission filed a civil fraud suit against him back in February; and that he arranged to voluntarily surrender to authorities upon learning of his indictment. We note that Stanford also has a home in South Florida... complete with a moat.

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Sir Robert Allen Stanford is scheduled to be arraigned today on conspiracy, mail and wire fraud, money laundering and obstruction charges in Houston in the U.S. District Court for the Southern District of Texas. Stanford is represented by attorneys Dick DeGuerin and Sean Ryan Buckley, of the Houston firm of DeGuerin and Dickson.

According to the docket for the case, the Government obtained its 21-count indictment, which can be viewed here, last Thursday and promptly moved to seal (i.e. prevent public access to) it, and then unsealed it on Friday shortly before Stanford’s arrest.

The Court will likely revisit the issue of whether Stanford is entitled to release before trial. On Friday, the Court ordered co-defendants Mark Kuhrt and Gilberto Lopez released on a $100,000 unsecured bond. However, given Stanford’s considerable wealth and ties abroad, any amount of bond imposed in his case will undoubtedly be far higher, if Stanford is granted pre-trial release at all, that is. The U.S. District Court for the Eastern District of Virginia determined that Stanford posed a high risk of flight, and denied bond.

The case will be tried before U.S. District Judge David Hitter, a brief description of whom can be found here.

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The writers of Federal Criminal Defense Blog have been busy writing on other matter and apologize for the brief hiatus. Much has happened in the sphere of white collar crime even during our short absence, most notably developments in the two largest Ponzi schemes in U.S. history, and we have some catching up to do.

We’ll start with the second largest—an indictment indictment against billionaire Texas financier Sir Robert Allen Stanford, 59, was unsealed in the U.S. District Court for the Eastern District of Virginia on Friday according to the Associated Press  and the BBC. The 50-page indictment alleges that Stanford and six other defendants with allegedly perpetrated a $7 billion Ponzi-style fraud. It charges Stanford and the other defendants with 21 counts, including 7 counts of wire fraud, 10 counts of mail fraud, conspiracy to obstruct an investigation for the Securities and Exchange Commission, obstruction of an investigation by the SEC and conspiracy to commit money laundering. Defendants Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt are executives of Stanford Financial Group. Defendant Leroy King, a former bank regulator for the Caribbean island nation of Antigua and Barbuda, allegedly accepted more than $100,000 in bribes from the other defendants in order to allow the alleged scheme to continue.

The indictment alleges that the defendants sold certificates of deposit issued by Stanford International Bank, based in Antigua, to investors, promising large returns. The defendants allegedly made false claims to investors regarding the growth of Stanford Financial Group’s assets.

The scheme had approximately 30,000 investors. Stanford is alleged to have diverted more than $1.6 billion in investment funds in personal loans to himself. More than $1 billion in investment money is allegedly unaccounted for. Stanford is also charged in the indictment with allegedly conspiring to obstruct an SEC proceeding. Stanford Financial Group’s finance chief, James M. Davis, is cooperating with investigators. Davis has been charged with fraud and obstruction in a separate indictment.

Stanford was the owner of a newspaper, two restaurants, and a development company in Antigua, and was a cricket enthusiast and owner of the Stanford cricket grounds in Antigua. In 2008, Stanford staged a $20 million, winner-takes-all, match between a West Indian XI and England at the grounds. In 2006, Stanford became the first American to be knighted by Antigua and Barbuda.

Stanford is represented by attorney Dick DeGuerin, who has issued a statement to the press that Stanford is innocent of the charges. Stanford has made repeated statements as to his innocence and has alleged that no money was lost.

Stanford surrendered to the FBI on Thursday and had his initial appearance on Friday. U.S. Magistrate Judge Hannah Lauck determined that Stanford posed a flight risk and ordered him to remain in custody pending a future detention hearing in Houston. Several governments have frozen his assets. Stanford faces as much as 250 years in prison if convicted.

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By way of background, the Government originally charged Syed Haris Ahmed in a sealed indictment filed on March 23, 2006. The Government obtained a Superseding Indictment on July 19, 2006. It has charged Ahmed and his co-defendant, Ehsanul Islam Sadequee, with one count of conspiracy to provide material support to terrorists, in violation of Title 18 United States Code Sections 956 and 2332b; one count of providing and attempting to provide material support to terrorists, in violation of Title 18, Sections 956, 2332b and 2339A; one count of conspiracy to provide material support to a Designated Foreign Terrorist Organization, in violation of Title 18, Section 2339B; and one count of attempting to provide material support to a Designated Foreign Terrorist Organization, in violation of Title 18, Section 2339B.

The Government’s Superseding Indictment contains the following facts and allegations:

Ahmed was born in Pakistan in 1984 and became a naturalized U.S. citizen. Sadequee, who is allegedly nicknamed “Shifa,” was born in Virginia in 1986, and is of Bangladeshi descent.

In or around late 2004, Ahmed and Sadequee and another person engaged in alleged paramilitary training, including with paintball guns, in Northwest Georgia.

On or about February 26, 2005, Ahmed and Sadequee traveled to Toronto, Canada, by bus. While in Toronto, Ahmed and Sadequee allegedly met in person with “supporters of violent jihad” and “discussed strategic locations in the United States that were suitable for terrorist attack, including military bases and oil storage facilities and refineries.” Ahmed, Sadequee and the others allegedly also “explored how they might disrupt the world-wide Global Positioning System (GPS)” and “a plan for members of the group to travel to Pakistan to seek and receive paramilitary training that they would then use to engage in violent jihad.”

After returning to Atlanta, in or about March or April 2005, Ahmed and Sadequee further discussed these plans, and also the possibility of attacking Dobbins Air Reserve Base in Marietta, Georgia.

At or around this time, Sadequee was allegedly in communication with Younis Tsouli, an unindicted co-conspirator in the United Kingdom.

On or about April 10 and 11, 2005, Ahmed and Sadequee traveled to Washington, D.C., in Ahmed’s pickup truck. On April 11, Ahmed and Sadequee allegedly “made short digital video recordings… of symbolic and infrastructure targets of potential terrorist attacks in the Washington, D.C., area, including the United States Capitol; the headquarters building of the World Bank…; the Masonic Temple in Alexandria, Virginia; and a group of large fuel storage tanks near I-95 in northern Virginia.”

On returning to Atlanta, Ahmed allegedly gave the video clips to Sadequee so that he could send the clips to supporters of violent jihad abroad. Sadequee allegedly sent the video clips to Tsouli in the United Kingdom and Tsouli stored the clips on his computer along with other materials relating to violent jihad.

Between March and July 2005, Sadequee allegedly provided Ahmed with the contact information for Abu Umar, an unindicted co-conspirator, and told Ahmed that Abu Umar could assist Ahmed with obtaining paramilitary training in Pakistan. On or about July 17, 2005, Ahmed traveled from Atlanta to Pakistan for the alleged purpose of studying in a madrassa and then obtaining paramilitary training to engage in violent jihad in Kashmir or other locations, including the U.S. Ahmed is alleged to have intended to join Lashkar-e-Tayyiba (“Army of the Righteous”). Ahmed was allegedly unsuccessful in his attempts to enter a madrassa or to obtain paramilitary training, and returned to Atlanta.

On or about August 18, 2005, Sadequee traveled from Atlanta to Bangladesh to allegedly get married and to pursue violent jihad. Sadequee was stopped as he traveled through John F. Kennedy Airport in New York and was discovered to allegedly have two compact discs concealed in the lining of his suitcase which contained a Fairfax County, Virginia, Visitor’s Center map of the Washington area, including the sites of four potential terrorist targets which Sadequee and Ahmed had videotaped in April 2005. Sadequee was interviewed by federal agents and allegedly falsely stated that he had traveled to Toronto alone.

On or about August 19, 2005, Ahmed returned to Atlanta from Pakistan and was interviewed by federal agents at Hartsfield International Airport in Atlanta. Ahmed allegedly made false and misleading statements about his travel to Canada and Pakistan, allegedly stating that he had made the trips to visit friends and family and to attend a religious school.

In the Fall of 2005, Ahmed allegedly researched shaped explosive charges and methods to defeat surveillance by government authorities. He also allegedly cautioned an individual to avoid discussing certain topics over the telephone.

On or about November 27, 2005, Ahmed allegedly told a supporter of violent jihad of his intent to go abroad again to train for, and engage in, violent jihad, and told the individual to read the indictment against Jose Padilla. At or around this time, Ahmed allegedly reviewed a periodical for gun enthusiasts.

In early 2006, Ahmed allegedly engaged in efforts to detect and evade suspected government surveillance. In March of 2006, agents from the FBI Joint Terrorism Task Force engaged in a series of interviews with Ahmed, in which Ahmed allegedly attempted to conceal the true nature of his, Sadequee’s and their alleged co-conspirators’ discussions, activities and plans. After the interviews began, Ahmed communicated with Sadequee in Bangladesh and warned him about the FBI’s interest in their activities.

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The trial of Syed Haris Ahmed is Georgia’s most significant terrorism case and we will collect for readers daily information on the trial and additional information. Today’s information on the Ahmed/Sadequee Trial comes from the Atlanta Journal-Constitution, WSBTV and CNN.

Ahmed is 24, an Atlanta area native and a former student at Georgia Tech. Ahmed waived his right to jury trial, and his case is being tried before District Court Judge William S. Duffey in the U.S. District Court for the Northern District of Georgia without a jury. Jack Martin, of Martin Brothers, P.C., is representing Ahmed. Assistant U.S. Attorney Robert McBurney is representing the United States. Ahmed’s co-defendant, Ehsanul Islam Sadequee, will be tried in August. Stephanie Kearns of the Federal Defender Program is representing Sadequee.

On Monday, Mr. Martin gave his opening statements to the Court, describing Ahmed as a confused, frustrated and immature young man who “fell prey” to websites espousing extremist views. Mr. Martin characterized the alleged plans for terrorist acts as “passing random thoughts, momentary ideas, childish fantasies, unformed, inchoate notions.” Mr. Martin argued that Ahmed had the ability to commit the alleged acts but said “No.” He stated that Ahmed’s idea of paramilitary training was shooting paintball guns with a friend in the North Georgia woods.

Mr. McBurney argued that Ahmed “one step removed from the bomb throwers” and intended to wage violent jihad. Mr. McBurney argued that Ahmed was a would-be terrorist who went to Pakistan to join the Taliban. He said that the videos made by Ahmed while allegedly “casing” locations in Washington, D.C., including the Capitol and the Pentagon, were intended to prove to terrorists overseas that Ahmed had access to Washington’s “backyard” and could get in close to targets. McBurney said the government’s case is about supporting terrorism and not actually “pulling the trigger or dropping the bomb.”

FBI Special Agent Mark Richards testified for the government. During Agent Richard’s testimony, the government showed some of the videos. In one video of the World Bank Building, Ahmed bobbed up and down so much that Mr. Martin asked Special Agent Richards “If a terrorist was attacking on a pogo stick, this might be useful, right?” However, another video shows Ahmed and Sadequee driving past the Pentagon with Sadequee stating “This is where our brothers attacked.”

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The government’s case in many instances will evolve or shift to some extent over the course of a criminal prosecution. It may be a long time between indictment and trial, and the prosecution may come into possession of new evidence before trial, or may not have thoroughly reviewed the evidence which it does possess until after the return of the indictment. In addition, the prosecution may adjust its arguments or evidence in reaction to the defense. Whatever the reason, the prosecution in many criminal cases may determine to argue or present evidence at trial regarding a theory of criminality which differs to some degree from the crimes alleged in its original indictment. A thorough prosecutor will sometimes seek to provide for such a shifting theory by obtaining a superseding indictment from the grand jury, but in other cases the prosecution may not notice any need to do so or may simply neglect to do so. In any event, attorneys should carefully evaluate the prosecution’s arguments and proof at trial, as well as the trial court’s instructions to the jury, in order to determine whether a variance or amendment of the indictment has occurred. Following is a brief survey of the Eleventh Circuit Court of Appeals’ current position on amendments to or variances with the indictment.

“A constructive amendment occurs when the essential elements of the offense as alleged in the indictment are altered to broaden the potential bases for conviction beyond what the indictment contains.” United States v. Tampas, 493 F.3d 1291 (11th Cir. 2007) (citing United States v. Narog, 372 F.3d 1243, 1247 (11th Cir. 2004); United States v. Keller, 916 F.2d 628, 634 (11th Cir. 1990)); see also United States v. Ward, 486 F.3d 1212, 1227 (11th Cir. 2007). A constructive amendment of the indictment constitutes per se reversible error because it violates a defendant’s Fifth Amendment right to be tried on charges presented to the grand jury. See United States v. Tampas, 493 F.3d 1291 (11th Cir. 2007) (citing United States v. Weissman, 899 F.2d 1111, 1114 (11th Cir. 1990)). Under the Fifth Amendment, “a defendant can only be convicted for a crime charged in the indictment. It would be fundamentally unfair to convict a defendant on charges of which he had no notice.” Ward, at 1227 (citing Keller, at 632-33). The mere presentation of evidence not referenced in the indictment, such as pursuant to Federal Rule of Evidence 404(b), does not constitute an amendment or variance. See United States v. Lavigne, 282 Fed.Appx. 790, 793 (11th Cir. 2008) (unpublished).

In contrast, “a variance occurs when the facts proved at trial deviate from the facts contained in the indictment but the essential elements of the offense are the same.” Ward, 486 F.3d at 1227 (citing Keller, at 634; United States v. Flynt, 15 F.3d 1002, 1005-06 (11th Cir. 1994)). A variance only requires reversal where the defendant can establish that his or her rights were substantially prejudiced. Id. (citing Keller, at 633).

The Court has found no constructive amendment where an indictment charged the defendant with distributing crack cocaine and the trial court instructed the jury that it could find the defendant guilty if he had distributed either cocaine or crack cocaine, based upon the fact that the type of drug is not an element under the controlled substance statute, 21 U.S.C. § 841, United States v. Porter, 293 Fed.Appx. 700, 703, 04 (11th Cir. 2008) (unpublished); where the government argued in its closing arguments that it need not prove that all of the defendants named in the indictment were members of the scheme, but the indictment charged the defendant with conspiring with two named co-defendants as well as “other persons” United States v. Nunnally, 249 Fed.Appx. 776, 778 (11th Cir. 2007) (unpublished); where the trial court failed to instruct the jury that it had to find that the defendant embezzled a specific amount, but the indictment alleged that the defendant embezzled property having a value in excess of $5,000, Tampas, at 1291; where the trial court instructed the jury that it could still convict the defendant on the substantive mail and wire fraud counts of the indictment if it was unable to reach agreement on the conspiracy charge did, despite the fact that the government had referenced the conspiracy in the substantive counts of the indictment, Ward, at 1227, 28; where, despite the fact that the indictment alleged that the defendant possessed “more than 20 kilograms of cocaine,” the trial court instructed the jury that it could find the defendant guilty if it found that he possessed “a measurable amount” of a controlled substance, United States v. Knight, 213 Fed.Appx. 835, 838, 39 (11th Cir. 2007) (unpublished); where the government alleged in its indictment that the defendant committed an act “on or about” a particular date, but the proof at trial showed that the act was committed on a different date, United States v. Strevell, 185 Fed.Appx. 841 (11th Cir. 2006) (unpublished); where the indictment charged the defendant with an offense involving cocaine, but the proof at trial and the trial court’s jury instructions referred to crack cocaine, United States v. Rutherford, 175 F.3d 899, 906 (11th Cir. 1999); where the government’s indictment alleged that a certain person was the victim of the defendant’s extortion, but the proof at trial demonstrated that the person had no connection with the money obtained, United States v. Flynt, 15 F.3d 1002, 1006 (11th Cir. 1994); where the district court deviated in its instructions to the jury from the allegations in the indictment concerning a non-essential element of the crime, United States v. Lignarolo, 770 F.2d 971, 981 (11th Cir. 1985); where the government proved events of a conspiracy at trial which were not listed in the overt acts section of the indictment, United States v. Gold, No. 83-3231, 83-3230, 83-3267, 83-3239, 1984 WL 48339 (11th Cir. 1984); and where the government dropped two alleged co-conspirators from its conspiracy allegations at trial, United States v. Davis, 679 F.2d 845, (11th Cir. 1982).

However the Eleventh Circuit has found constructive amendments of indictments and improper broadening of the potential bases for conviction where the indictment charged the defendants with knowing or having reasonable cause to believe that pseudoephedrine would be used to manufacture methamphetamine, but the trial court instructed the jury that it could convict the defendants if it found that they knew or had reasonable cause to believe that the pseudoephedrine would be used to make “any controlled substance,” Narog, at 1249; where the government charged that the defendant knowingly and “willfully” committed money laundering, but the court redacted the term “willful” from its charge on the definition of “intentional,” United States v. Cancelliere, 69 F.3d 1116, 1121 (11th Cir. 1995); where the indictment alleged that the defendant conspired with a particular person and the trial court instructed the jury that it could convict the defendant if it found he conspired with “any” person, Keller, at 636; where the RICO charges in the indictment charged that the “enterprise” was a particular organized crime family but the court instructed the jury that it could convict the defendants if it found a different enterprise, United States v. Weissman, 899 F.2d 1111, 1115 (11th Cir. 1990); and where the trial court instructed the jury that it could convict the defendant if it found the elements of an offense which had not been charged in the indictment, United States v. Peel, 837 F.2d 975, 979 (11th Cir. 1988).

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The bizarre extortion attempt of University of Louisville basketball coach, Rick Pitino, has resulted in an indictment reports the Louisville Courier-Journal. Karen Sypher, the estranged wife of the University of Louisville equipment manager, was the lone defendant indicted yesterday by a grand jury in the Western District of Kentucky for trying to extort money from Pitino. This case came into the news last month when Pitino in a statement released by the university said that he intended to “vigorously defend my reputation and the character of my family.”

Sypher was arrested on a criminal complaint, here, last month filed by the FBI, charging her with attempted extortion of Pitino and making false statements to the FBI. The complaint alleges:

•  that Pitino received 3 phone messages in February by a then unknown caller, which made personal allegations against Pitino that “could harm Mr. Pitino’s reputation . . . in that they characterized an interaction between Mr. Pitino and an unnamed woman as criminal in nature.”
• Pitino told the FBI that after the first two phone messages he met with Karen Sypher and her husband and asked what she wanted.
• In early March Sypher’s husband delivered to Pitino a list of demands written by Sypher that included college for her children, 2 cars, a house paid off, $3,000 per month and a single payment of $75,000.
• On March 22, 2009 an attorney for Sypher demanded $10,000,000 through a letter sent to Pitino.
• On April 17, 2009 FBI agents interviewed the individual who made the threatening phone calls to Pitino at Sypher’s request.

Sypher was released following her arrest on an unsecured bond last month and she is to be arraigned today on the charges in the indictment.

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Rod Blagojevich, the defrocked governor of Illinois, was finally indicted on Thursday, April 2, on 16 counts in a 19 count, 75 page Superseding Indictment. Blagojevich, you will recall was arrested on December 9, 2008. The government at the end of December was granted a 90 day extension within which to bring an indictment. That time frame was set to expire on April 7. As expected Blagojevich becomes the second consecutive Illinois Governor indicted for racketeering conspiracy, among other charges, including mail fraud, wire fraud and honest services mail fraud. Five others were also indicted, including Blagojevich’s brother, Robert, a top fundraiser.

The criminal RICO enterprise is alleged to be the Office of the Governor of Illinois and the principal campaign fundraising vehicle for Blagojevich, “Friends of Blagojevich.”

Simply put, the indictment alleges what is generally called a “pay to play” scheme that included Blagojevich using his ability to fill President Obama’s vacant Senate seat, state jobs and other appointments in exchange for contributions, jobs and monies.  The indictment also alleges that Blagojevich made false statements to the FBI in the presence of counsel in a 2005 interview with the FBI. Although Blagojevich’s wife is mentioned on several occasions in the indictment, she has not been charged.

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Most federal criminal proceedings involve some attempt by the defense to dismiss the indictment or counts in the indictment. Federal Rule of Criminal Procedure 7 provides, in relevant part:

(c) Nature and Contents.

(1) In General. The indictment or information must be a plain, concise, and definite written statement of the essential facts constituting the offense charged and must be signed by an attorney for the government. It need not contain a formal introduction or conclusion. A count may incorporate by reference an allegation made in another count. A count may allege that the means by which the defendant committed the offense are unknown or that the defendant committed it by one or more specified means. For each count, the indictment or information must give the official or customary citation of the statute, rule, regulation, or other provision of law that the defendant is alleged to have violated.

Fed.R.Crim.P. 7. The Advisory Committee's Notes to Rule 7 merely confirm a "simple form of indictment." Fed.R.Crim.P. 7, Notes (1944 Adoption).

Accordingly, as practitioners are well aware, attacks on the sufficiency of a charge in an indictment are rarely successful pre-trial, or on appeal. The Eleventh Circuit and former Fifth Circuit have reversed defendants' convictions on a handful of occasions based upon an insufficiently drafted indictment. In United States v. Bobo,  344 F.3d 1076 (11th Cir. 2003), the Eleventh Circuit reversed the defendant's conviction for healthcare fraud in violation of 18 U.S.C. s 1347 based on the fact that the government's indictment did not specify the scheme or artifice to defraud with which the government was charging the defendant, did not set forth the manner and means by which the scheme to defraud allegedly operated, and omitted language from s 1347 that the the fraud be “in connection with the delivery of or payment for health care benefits, items, or services,” id. at 1084. United States v. Adkinson, 135 F.3d 1363 (11th Cir. 1998)

"For an indictment to be valid, it must 'contain [ ] the elements of the offense intended to be charged, and sufficiently apprise[ ] the defendant of what he must be prepared to meet.'” Bobo,  344 F.3d at 1083 (quoting Russell v. United States, 369 U.S. 749, 763, 82 S.Ct. 1038 (1962); United States v. Sanchez, 269 F.3d 1250, 1314 (11th Cir. 2001) ( en banc ). "In order to be valid, an indictment must allege that the defendants performed acts which, if proven, constitute the violation of law for which they are charged." Adkinson, 135 F.3d at 1371 n.23 (citing United States v. Polychron, 841 F.2d 833, 833 (8th Cir.1988)).

 "[I]f the indictment tracks the language of the statute, 'it must be accompanied with such a statement of the facts and circumstances as will inform the accused of the specific offense, coming under the general description, with which he is charged.'” Bobo,  344 F.3d at 1083 (quoting Russell, 369 U.S. at 765; citing Hamling v. United States, 418 U.S. 87, 117-18, 94 S.Ct. 2887 (1974)). "When the indictment uses generic terms, it must state the offense with particularity." Bobo,  344 F.3d at 1083 (quoting Russell, 369 U.S. at 765). "'[A]n indictment must enable the defendant to enter a plea that will bar any “future prosecutions for the same offense.” Bobo,  344 F.3d at 1083 (quoting Hamling, 418 U.S. at 117).

“'An indictment not framed to apprise the defendant with reasonable certainty, of the nature of the accusation against him is defective, although it may follow the language of the statute.'” Bobo,  344 F.3d at 1083 (quoting Russell, 369 U.S. at 765). "'An indictment must sufficiently warn the defendant of the charges against him so that he may adequately prepare his defense.'” Adkinson, 135 F.3d at 1373 (quoting United States v. Alford, 516 F.2d 941, 945 (5th Cir. 1975)). "Ill-defined charges leave 'the prosecution free to roam at large-to shift its theory of criminality so as to take advantage of each passing vicissitude of the trial and appeal.'” Adkinson, 135 F.3d at 1374 (quoting Russell , 369 U.S. at 768).

Gillen Withers & Lake LLC are white collar and corporate criminal defense attorneys with an outstanding reputation and track record, handling cases throughout Georgia and the nation. Call our Atlanta, Georgia, office at (404) 842-9700 or our Savannah, Georgia, office at (912) 447-8400.

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