Opinion
03-CR-056S(F).
November 17, 2004
MICHAEL A. BATTLE, United States Attorney, Attorney for Government, TRINI E. ROSS, Assistant United States Attorney, of Counsel, Federal Centre, Buffalo, New York.
PERSONIUS MELBER LLP, Attorneys for Defendants, RODNEY O. PERSONIUS, of Counsel, Buffalo, New York.
REPORT and RECOMMENDATION DECISION and ORDER
JURISDICTION
This case was referred to the undersigned by Honorable William M. Skretny on March 11, 2003, for disposition of all pretrial matters, including Report and Recommendation on dispositive motions. The matter is presently before the court on Defendants' motion, filed July 20, 2004, seeking dismissal of Count 29 of the Indictment, discovery, and a Bill of Particulars (Doc. No. 81).
Defendants' motion is dispositive insofar as it seeks dismissal of Count 29 of the Indictment.
BACKGROUND and FACTS
The fact statement is taken from the pleadings and motion papers filed in this action.
Blumhagen was president and a director of Tee to Green, and controlled Tee to Green's daily operations. Indictment ¶ 3. Susan Blumhagen was Tee to Green's majority shareholder, a director, participated in Tee to Green's daily operations including its financial matters, and had signature authority for all of Tee to Green's bank accounts into with investors' checks were deposited and from which commission checks were drawn and Tee to Green's expenses were paid. Indictment ¶¶ 4-5. The Blumhagens are further alleged to have sent to the noteholders "lulling" letters intended to mislead the investors into a false sense of security by advising that the value of their investment was increasing. Indictment Count 1, ¶ 2. Defendant Trotter was the owner and principal of Hanover Financial Group ("Hanover"), located in Florida. Indictment ¶ 6. Trotter is alleged to have recruited sales agents to assist in selling the promissory notes for the Tee to Green project. Indictment Count 1, ¶ 5.
On March 1, 2004, Defendant Trotter pleaded guilty to Count 1 of the Indictment in full satisfaction of the charges pending against him and is awaiting sentencing.
There were two versions of Tee to Green project's putative bonded offering summary ("the Bonded Offering Summary"), including the first version naming the Tangent Insurance Company, Ltd., Antigua, British West Indies ("Tangent"), as the company who supposedly bonded the promissory notes, a primary insurer for which Francis Clarkson ("Clarkson") in Charlotte, North Carolina was the United States processing agent, and naming as the reinsurer of the promissory notes a syndicate of insurance companies in the United Kingdom, including Lloyds' Underwriters, Aetna Re-Insurance Company, Skandia International Insurance Corp., AXA Re, and EXCO +. Indictment ¶¶ 8, 11. The second version of the Bonded Offering Summary named Tangent as the company bonding the promissory notes through its United States agent Clarkson, and states that bonds "were re-insured through a syndicate of insurance companies of the highest quality in the United Kingdom, and Europe." Indictment ¶¶ 9, 12.
On July 20, 2004, the Blumhagens filed an omnibus motion (Doc. No. 81) ("Defendants' Motion") seeking, inter alia, discovery, preservation of investigators' rough notes, a Bill of Particulars, and dismissal of Count 29 of the Indictment, along with a Memorandum of Law Supporting Defendants Blumhagens' Motion for Discovery, a Bill of Particulars and Dismissal (Doc. No. 82) ("Defendants' Memorandum"). On August 20, 2004, the Government filed the Government Response to Defendants Blumhagens' Notice of Motion (Doc. No. 84) ("Government's Response"), and a cross-motion entitled Government's Demand for Discovery and Inspection (Doc. No. 85) ("Government's Motion"). On October 29, 2004, Defendants filed a Reply Memorandum Supporting Defendants Blumhagens' Motion for Discovery, a Bill of Particulars and Dismissal (Doc. No. 89) ("Defendants' Reply").
Oral argument on the motions was conducted on October 8, 2004 and completed on November 5, 2004. During oral argument, the court GRANTED Defendants' requests that the Government provide, not later than 30 days prior to trial, expert disclosure, any charts or summaries to be used in the Government's case in chief, and character evidence pursuant to Fed.R.Evid. 404(b) and 608, and identify, not later than 30 days prior to trial, Government trial witnesses. Defendants' request for early disclosure of material subject to the Jencks Act, 18 U.S.C. § 3500, was DENIED with leave for Defendants' to renew their request before the District Judge at trial. The Government's motion seeking reciprocal discovery was GRANTED. The undersigned reserved decision on Defendants' requests for preservation of agents' rough notes, particularization of the identity of unindicted coconspirators, and dismissal of Count 29 of the Indictment.
Based on the following, Defendants' motion is GRANTED as to the request for preservation of rough notes, and DENIED insofar as it seeks particularization of the identity of other unindicted coconspirators. Defendants' motion should be DENIED insofar as it seeks dismissal of Count 29 of the Indictment.
DISCUSSION
1. Preservation of Agents' Rough Notes
Defendants seek preservation for possible use at trial of the rough notes prepared by any law enforcement agents or investigators who may testify on the Government's behalf. Defendants' Memorandum at 8. The Government argues in opposition that it is not required to preserve and produce an agent's handwritten notes that the agent has reduced to typewritten memoranda or reports, but has acknowledged its obligation to preserve for trial any notes made by an informant or Government witness that are deemed witness statements under the Jencks Act. Government's Response at 6-7. Defendants reply in further support of the request that at this time, all Defendants request is that the Government agree to preserve all rough notes, and that no request has yet been made fo the immediate production of such notes to determine whether the notes qualify as Jencks Act material. Defendants' Reply at 3-5.
Law enforcement agents generally are not required to preserve handwritten notes of interviews with potential witnesses provided the agents have incorporated the notes into formal typewritten reports. United States v. Elusma, 849 F.2d 76, 79 (2d Cir. 1988). Nevertheless, preservation of handwritten or rough notes has been ordered, despite the fact that such notes were reduced to typewritten memoranda or reports, in cases where the courts have determined that such notes may be subject to disclosure as Jencks Act material. See United States v. Triumph, 2004 WL 1920352, *2 (D.Conn. Aug. 24, 2004) (ordering Government to preserve all rough notes through trial's conclusion); United States v. Allen, 289 F.Supp.2d 230, 249-50 (N.D.N.Y. 2003) (stating "defendants are entitled to examine any notes by a government witness after the witness has testified at trial" and directing Government to advise investigators to retain rough notes for possible disclosure as Jencks Act material at trial); United States v. Brunson, 1998 WL 146271, * 5 (N.D.N.Y. March 26, 1998) (directing the Government to inform investigators to retain rough notes which may be subject to Jencks Act). Moreover, under the Jencks Act, a defendant in a criminal trial is entitled, after a government witness has testified on direct, "to receive for purposes of cross-examination any written statement of the witness in the government's possession `which relates to the subject matter as to which the witness has testified,' [and] [i]f the government's representations as to relevancy are challenged, the government must make the disputed statement available to the district court for an in camera inspection and ruling." United States v. Koskerides, 877 F.2d 1129, 1133 (2d Cir. 1989) (quoting 18 U.S.C. § 3500(b)).
In Koskerides, supra, the Second Circuit held that where the district court had reviewed in camera handwritten notes of a law enforcement agent and determined that such notes did not pertain to anything said by the agent on direct examination, the district court committed no clear error in ruling that the notes did not have to be disclosed to the defendant. Koskerides, supra, at 1133.
As stated, in the instant case, the Government has acknowledged its obligation to preserve for trial any notes made by an informant or Government witness that are deemed witness statements under the Jencks Act. Government's Response at 6-7. As Defendants do not seek, at this time, disclosure of such notes, the court does not consider whether disclosure is warranted. Rather, Defendants' request for preservation of any rough notes made by an informant or Government witness likely to be deemed witness statements under the Jencks Act is GRANTED, and the Government is reminded of its obligation under Jencks to disclose to Defendants any such notes which later become relevant as statements by Government informants or witnesses, and instructed to advise all law enforcement agents involved in the underlying investigation who may conceivably testify to preserve any rough notes related to their respective investigative activities.
2. Particularization
Defendants seek particularization as to the names of any unindicted coconspirators known to the Grand Jury as the Indictment alleges. Defendants' Memorandum at 12-17. Defendants maintain that despite the fairly detailed allegations contained in the Indictment and the extensive voluntary discovery made available to Defendants, it is not possible to determine who the Grand Jury considered unindicted coconspirators. Defendants' Memorandum at 14. The Government contends that such particularization is not required because full discovery of all the evidence has been provided and the Indictment is sufficiently detailed as to the underlying fraudulent conduct attributable to Defendants. Government's Response at 16-17. Defendants argue, nevertheless, in further support of particularization that without such particularization, it is impossible to determine with regard to Count 1 whether any of the sales agents Trotter allegedly recruited to sell the fraudulent promissory notes were aware of the fraudulent nature of the notes, i.e., that the notes were, contrary to Defendants' representations, neither bonded nor insured, when the agents sold the notes and, thus, potentially are unindicted coconspirators. Defendants' Reply at 7-8. Further, without such information, prospective cross-examination by Defendants will, Defendants assert, be adversely affected because Defendants will be unable to fully attack a Government witness's credibility and will be compelled to repeatedly object to hearsay statements but for the coconspirator exception applicable to statements made during the course of and in furtherance of a conspiracy, thereby engendering jury hostility. Defendants' Reply at 8-9. Defendants further maintain that such information is important to the preparation of their defense, particularly as to the scope of the alleged conspiracy. Defendants' Reply at 9. At oral argument, the Government contended that while such information may be helpful to Defendants, it is not so necessary to the preparation of a defense such that the failure to particularize results in manifest prejudice to Defendants.
Under Fed.R.Crim.P. 7(f), the court is authorized to direct the filing of a Bill of Particulars as justice requires. A defendant may seek particularization to identify with sufficient particularity the nature of the charges against him, thereby enabling the defendant to prepare for trial, to prevent surprise, and to interpose a plea of double jeopardy if he should be prosecuted a second time for the same offense. Wong Tai v. United States, 273 U.S. 77 (1927); United States v. Bortnovsky, 820 F.2d 572 (2d cir. 1987); United States v. Taylor, 707 F.Supp. 696 (S.D.N.Y. 1989). The decision as to whether to direct further particularization is within the discretion of the district court. United States v. Panza, 750 F.2d 1141, 1148 (2d Cir. 1984). If the discovery material sought by the defendant is provided in the indictment or in some acceptable alternate form, particularization is not required. Bortnovsky, supra.
The test as to whether to order particularization is "whether the information sought is necessary, not whether it is useful." United States v. Matos-Peralata, 691 F.Supp. 780. 791 (S.D.N.Y. 1988). Court will not order particularization where the government has provided the information requested either "in the indictment or some acceptable alternative form." Bortnovsky, supra, at 574; United States v. Feola, 651 F.Supp. 1068, 1133 (S.D.N.Y. 1987) (whether the information sought has been provided elsewhere, such as in other items provided by discovery, responses made to unobjected requests for particulars, prior proceedings, and the indictment itself may be considered in deciding whether to order particularization). A Bill of Particulars should only be required "where the charges in the indictment are so general that they do not advise the defendant of the specific acts of which he is accused." Feola, supra, at 1132. Further, "[a]cquisition of evidentiary detail is not the function of the bill of particulars." United States v. Torres, 901 F.2d 205, 234 (2d Cir.), cert. denied, 498 U.S. 906 (1990) (denying request for Bill of Particulars identifying unindicted alleged coconspirators referred to in indictment as `known and unknown' on the basis that such information was unnecessary to advise defendants of the specific acts of which they were accused).
In this case, the Indictment states that Trotter and Blumhagen "falsely" told sales agents that investors in the Tee to Green promissory notes would receive bonds from Tangent, Indictment at 8 ¶ 15, and at 10 ¶ 3, and that in January 1997, Blumhagen and Trotter " falsely told the prospective sales agents" that the promissory notes were bonded by Tangent and were reinsured by a syndicate of insurance companies in the United Kingdom, Indictment at 10 ¶ 4 (italics added). As the Indictment alleges only that sales agents proceeded on the basis of false information supplied to them by Defendants, such factual allegation negates the possibility that any of the relevant agents could have joined the conspiracy as they had no knowledge of either its fraudulent means or objectives. Accordingly, there is no merit to Defendants' argument that without the requested particularization, Defendants cannot to determine whether any of the sales agents Trotter allegedly recruited to sell the fraudulent promissory notes were aware of the illegal nature of the notes when they sold the notes and, thus, will not be able to properly prepare to cross examine the sale agents as unindicted coconspirators. Defendants' Reply at 7-8. By its terms, the Indictment excludes such possible factual conclusions.
Defendants' cases are distinguishable. In United States v. DeGroote, 122 F.R.D. 131 (W.D.N.Y. 1988), the court ordered particularization identifying any unindicted coconspirators the Government admitted might have been accessories to the charged RICO conspiracy and the subject of evidence the Government intended to adduce at trial. DeGroote, supra, at 137-38. The court's decision was based on the determination that "[t]he rule is well settled that a `bill of particulars is a proper procedure for discovering names of coconspirators the Government plans to call as witnesses at trial.'" DeGroote, supra, at 137 (quoting United States v. Hughes, 817 F.2d 268, 272 (5th Cir. 1987)). Hughes, however, has not otherwise been followed by courts in the Second Circuit, and such a rule is overbroad when compared to decisions by the Second Circuit Court of Appeals reversing convictions for the improper denial of a bill of particulars.
For example, in United States v. Davidoff, 845 F.2d 1151 (2d Cir. 1988), although the defendant was charged with extortion directed at only one particular company, at trial, the defendant was surprised with evidence of extortion directed at three entirely different companies. In Davidoff, the court directed retrial with particularization that would obviate such unfair surprise. Davidoff, supra, at 1154-55. Similarly, in Bortnovsky, supra, the court found that a defendant in an insurance fraud case was impermissibly hindered by the government's failure to identify which of a series of burglaries were allegedly fake, and which of 4000 documents were allegedly fraudulent.
In contrast, in Torres, supra, the Second Circuit found no abuse of discretion based on the denial of a Bill of Particulars where the defendants in an alleged drug trafficking conspiracy had been supplied with "a wealth of evidentiary details" including extensive discovery and "exhaustive supporting affidavits." Torres, supra, at 234. Moreover, as noted, the Government has been directed to provide Defendants with a witness list 30 days prior to trial, and Defendants, through discovery, have a reasonably accurate view of the Government's potential witnesses. Accordingly, there is no basis for ordering particularization of unknown and unindicted coconspirators who are likely to be called as prosecution witnesses at trial unless, by calling such witnesses, Defendants would be so unfairly surprised as to be prejudiced in preparing cross-examination of the witnesses. The court thus will not order particularization of unindicted coconspirators who are likely to be called as witnesses at trial, although the Government is reminded to provide Defendants with the identity of any such witnesses, other than sales agents who, if called, would likely be such an unfair surprise to Defendants as to result in prejudice to the preparation of cross-examination.
Nor does the Government need to identify any unindicted coconspirators it does not plan to call as witnesses at trial. Although such particularization was ordered in DeGroote, that determination was based on the fact that the sole defendant was charged with conspiring with one named, but unindicted, coconspirator to defraud the United States by impeding the Internal Revenue Service's function of computing the defendant's income tax return and filing false tax returns. DeGroote, supra, at 133. The court determined that if the government failed at trial to sustain its burden of proof with regard to the individual person named, but unindicted, as the sole coconspirator, and also failed to introduce sufficient evidence of the defendant's involvement with any other conspirator, the defendant would be entitled to have the indictment dismissed. Id. at 138. Accordingly, in DeGroote, requiring the government to identify any unnamed and unindicted coconspirators was actually in the government's interest in successfully prosecuting the case because the government could call as witnesses the other unindicted coconspirators and attempt to establish a conspiracy with the defendant without creating unfair surprise that could be considered prejudicial to the defendant's preparation of his defense. Id. In contrast to DeGroote, in the instant proceeding, there is no reason to order the Government to identify any unindicted coconspirators whom the Government does not plan to call as a witness. Unless coconspirators (other than Trotter) are called as witnesses, Defendant will not likely encounter unfair surprise at trial.
Furthermore, the facts of United States v. Sacco, No. 91CR241A(F), slip. op. at 21-22 (W.D.N.Y. May 5, 1992), on which Defendants rely in support of particularization, Defendants' Memorandum at 16, are readily distinguishable from the instant case. In particular, Sacco concerned an alleged drug trafficking conspiracy involving numerous (13) named and indicted codefendants, commencing more than 10 years earlier, and involving large quantities of narcotics. Sacco, supra, at 21. Because it was difficult to determine from the indictment the extent of involvement of the various charged defendants, the court ordered particularization of all persons whom the Government intended to claim at trial were co-conspirators. Id. at 21-22. By comparisonIn contrast, here the Indictment is against only three defendants, one of whom has entered a plea in full satisfaction of the Indictment, and involves a substantially shorter period of time of criminality. Moreover, a plain reading of the Indictment demonstrates that the Blumhagens are alleged to have been central to the alleged crimes. Accordingly, Sacco provides no basis for the particularization sought by Defendants.
Defendants' motion is DENIED as to the request for particularization of other unindicted coconspirators.
3. Motion to Dismiss Count 29
Defendants seeks to dismiss Count 29 of the Indictment charging conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h) ("§ 1956(h)"), on the basis that no overt act in furtherance of the conspiracy is alleged. Defendants' Memorandum at 18-20. Although the Second Circuit has yet to address this issue, Defendants urge this court to rule consistent with other courts of appeal in holding failure to plead any overt action in furtherance of a charged money laundering conspiracy is a fatal defect requiring dismissal under Fed.R.Crim.P. 7(c)(1) and 12(b)(2). Defendants' Memorandum at 18-19. The Government argues that § 1956(h) should be construed consistent with caselaw addressing the same issue which earlier arose under 18 U.S.C. § 846 (§ 846"), the drug conspiracy statute, which the Supreme Court has ruled does not require proof of an overt act. Government's Response at 20-23 (citing United States v. Shabani, 513 U.S. 10, 13 (1994)). Defendants, in further support of dismissal, note that this issue is currently pending before the Court in the matter of United States v. Hall, 349 F.3d 1320 (11th Cir. 2003), cert. granted, 72 U.S.L.W. 3600 (U.S. June 21, 2004) (No. 03-1294), with oral argument scheduled for November 30, 2004, and submitted the argument raised by the Hall petitioners. Defendants' Reply at 10-14. After careful consideration, this court finds no merit to Defendants' argument.
First, a plain reading of the statute criminalizing conspiracy to launder money, 18 U.S.C. § 1956(h) ("§ 1856(h)"), reveals that an overt act is not among the required elements of the crime. Specifically, § 1956(h) provides that
[a]ny person who conspires to commit any offense as defined in this section or section 1957 shall be subject to the same penalties as those prescribed for the offence the commission of which was the object of the conspiracy.
It is significant that in the face of "congressional silence," the Supreme Court has consistently refused to construe a criminal conspiracy statute as requiring an overt act be committed in furtherance of the conspiracy. Shabani, supra, at 13 (holding drug conspiracy statute, 21 U.S.C. § 846, does not require proof of an overt act and citing Nash v. United States, 229 U.S. 373, 378 (1913) (no overt act required for conspiracy under Sherman Act), and Singer v. United States, 323 U.S. 338, 340 (1945) (no overt act required for conspiracy under Selective Service Act)).
That no overt act is required is consistent with the common law meaning of the term "conspiracy" which did not require an overt act. Shabani, supra, at 13 (observing "the settled principle of statutory construction that, absent contrary indications, Congress intends to adopt the common law definition of statutory terms."). Rather, under common law, criminal liability for conspiracy may imposed based solely on the act of conspiring, i.e., two or more persons agreeing to commit a crime. Id. In Shabani, the Supreme Court found instructive that, in contrast to the common law, when Congress passed the general conspiracy statute, 18 U.S.C. § 371 ("§ 371"), Congress included an explicit requirement that a conspirator "do any act to effect the object of the conspiracy." Id. at 14. The Court stated that "in light of this additional element in the general conspiracy statute, Congress' silence [as regarding the absence of any overt act requirement] in § 846 speaks volumes," especially given that § 371 preceded and, thus, "presumably provided the framework for the more specific drug conspiracy statute." Id. The Court thus concluded in Shabani that in enacting § 846 Congress deliberately dispensed with the need for an overt act by choosing to model the drug conspiracy statute on the Sherman Act, 15 U.S.C. § 1, which does not require any overt act, rather than on the general conspiracy statute, § 371, which requires an overt act as an element of the offense. Id. The Court further stated, in dicta, that by dispensing with the need for an overt act, a conspiracy statute "does not punish mere thought; the criminal agreement itself is the actus reus." Id. at 16 (citing Regina v. Bass, 88 Eng.Rep. 881, 882 (K.B. 1705)).
Defendants' reliance on United States v. Navarro, 145 F.3d 580 (3d Cir. 1998), and United States v. Conley, 37 F.3d 970 (3d Cir. 1994), as supporting their contention that § 1956(h) should be construed consistent with § 846, Defendants' Memorandum at 19, Defendants' Reply at 11, is unavailing. In particular, in Navarro, the Third Circuit stated in dicta that one of the four requisite elements of a money laundering conspiracy claim under § 1956(h) was the commission of an act in furtherance of the conspiracy by one of the conspirators. Navarro, supra, at 593. The court, however, based that statement on Conley, supra, which considered an overt act as an element for a money laundering conspiracy charged under 18 U.S.C. § 371 and 18 U.S.C. § 1956(a), rather than under 18 U.S.C. § 1956(h), which was not enacted until 1992, the year after the subject indictment in the Conley case was returned. Because the money laundering conspiracy in Conley was not charged under § 1956(h), the court did not reach the issue of whether a money laundering conspiracy charged under § 1956(h) requires proof of an overt act.
Nor does the structure of § 1956, including that Congress did not place § 1956(h) in the same subparagraph as the other substantive crimes, i.e., § 1956(a), require a different finding. Specifically, Defendants maintain that had Congress intended that a money laundering conspiracy as another substantive offense, Congress would have amended § 1956(a), which delineates activities prohibited as the substantive offense of money laundering, by adding a separate subparagraph prohibiting money laundering conspiracies. Defendants' Reply at 12-13. Defendants continue that because conspiring to launder money was not added under subparagraph (a), that subparagraph (h) does not delineate a separate crime for conspiring to launder money but, rather, merely enhances the penalty for engaging in a money laundering conspiracy, that is one having as its objective a violation of § 1956(a). Defendants' Reply at 13.
Defendants' argument that § 1956(h) is nothing more than a penalty enhancement provision is premised on the fact that the general conspiracy statute, § 371, provides that the penalty for engaging in a conspiracy is a fine of not more than $10,000, or imprisonment of not more than 5 years, or both, whereas § 1956(h) provides that conspiring to commit any money laundering offense subject the defendant to "the same penalties as those prescribed for the offence the commission of which was the object of the conspiracy." In other words, Defendants contend that § 1956(h) does not provide that conspiring to launder money is a substantive offense but, rather, a conspiracy to launder money should be charged under 18 U.S.C. §§ 371 and 1956(a), and § 1956(h) merely subjects the defendant to a money laundering conspiracy to harsher penalties than are available under § 371. This argument, however, is undermined by a plain reading of the statute in its entirety.
In particular, § 1956 is structured similarly to the drug crimes statutes, with 21 U.S.C. § 841(a) delineating what actions constitute unlawful acts and 21 U.S.C. § 841(b) providing penalties for violating § 841(a). The statute criminalizing a conspiracy to commit a drug crime is 21 U.S.C. § 846 which provides that
any person who attempts or conspires to commit any offense defined in this subchapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.21 U.S.C. § 846
Significantly, the Supreme Court has held that the drug conspiracy statute, i.e., 21 U.S.C. § 846, does not require proof of an overt act. Shabani, supra, at 13. Given the similarity between 18 U.S.C. § 1956(h) and 21 U.S.C. § 846, that § 846 is set out as a separate section of Title 21 which criminalizes certain activities involving controlled substances, whereas § 1956(h) is a subsection of the same section of Title 18 which criminalizes certain financial transactions as money laundering, is of little, if any, significance and does not support construing § 1956(h) as merely a penalty enhancement provision.
Other federal conspiracy offenses reflect a similar legislative choice of no overt act requirement. See 18 U.S.C. § 372 (conspiracy to impede a federal officer); 18 U.S.C. § 241 (conspiracy to violate civil rights). Compare 18 U.S.C. § 351(d) (conspiracy to kidnap or kill members of Congress or the Executive branch requires overt act).
Furthermore, contrary to Defendants' argument, Defendants' Reply at 12-14, the venue provision for money laundering cases, 18 U.S.C. § 1956(i), demonstrates that no overt act is required for a money laundering conspiracy conviction pursuant to § 1956(h). As relevant, § 1956(i)(1) provides for venue for completed acts of money laundering violating 18 U.S.C. § 1956(a), in
(A) any district in which the financial or monetary transaction is conducted; or (B) any district where a prosecution for the underlying specified unlawful activity could be brought, if the defendant participated in the transfer of the proceeds of the specified unlawful activity from that district to the district where the financial or monetary transaction is conducted.
However, venue for a prosecution for an attempt or conspiracy to launder money is proper "in the district where venue would lie for the completed offense under paragraph (1), or in any other district where an act in furtherance of the attempt or conspiracy took place." 18 U.S.C. § 1956(i)(2) (italics added). The use of the word "would," which is the future tense of the verb "will," in the venue provision for § 1956(h) conspiracy prosecutions demonstrates that no completed or overt act in furtherance of a money laundering conspiracy is required. Had Congress intended the conspiracy venue provision to refer to an overt act requirement for violating 18 U.S.C. § 1956(h), the provision would effectively establish venue for a § 1956(h) conspiracy "in the district where venue will lie for the completed offense," or "in the district where venue lies for the completed offense." Such result, however, renders superfluous § 1956(i)(2) which explicitly permits venue for a § 1956(h) conspiracy charge "in any other district where an act in furtherance of the attempt or conspiracy took place." TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) ("It is `a cardinal principal of statutory construction' that `a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void or insignificant.'") (quoting Duncan v. Walker, 533 U.S. 167, 174 (2001) (internal quotation marks omitted)).
Nor does the language in § 1956(i)(2) — "any other district where an act in furtherance of the attempt or conspiracy took place" — require a different result given that (i) such reference is preceded by the disjunctive "or," (ii) the place with the conspiracy ripened into existence may be difficult to ascertain, and (iii) an act in furtherance of a money laundering conspiracy may or may not have taken place. This construction is also consistent with the fact that as, by definition, an attempt is an incomplete offence it, thus, could only be venued wherever any action taken toward successful completion of the object offense occurred. In contrast, recognizing that § 1956(h) did not establish an overt act requirement, Congress enlarged the money laundering conspiracy venue possibilities to include not only the place of formation of the underlying conspiracy, but also, where there have been acts in furtherance of the conspiracy, the place where such acts occurred. It is an illogicality, therefore, that because an overt act is sufficient to establish venue under one prong of the money laundering conspiracy venue provision, i.e., § 1956(i)(2), that an overt act is necessary for § 1956(h) liability. Accordingly, the money laundering venue provision, § 1956(i), does not modify the substantive act of conspiring to launder money.
CONCLUSION
Based on the foregoing, Defendants' motion (Doc. No. 81) is GRANTED as to the request for preservation of rough notes, and DENIED insofar as it seeks particularization of the identity of other unindicted coconspirators, and should be DENIED insofar as it seeks dismissal of Count 29 of the Indictment.SO ORDERED, as to Defendants' requests for preservation of rough notes and a Bill of Particulars.
Pursuant to 28 U.S.C. § 636(b)(1), it is hereby
ORDERED that this Report and Recommendation be filed with the Clerk of the Court.
ANY OBJECTIONS to this Report and Recommendation must be filed with the Clerk of the Court within ten (10) days of receipt of this Report and Recommendation in accordance with the above statute, Rules 72(b), 6(a) and 6(e) of the Federal Rules of Civil Procedure and Local Rule 72.3.
Failure to file objections within the specified time or to request an extension of such time waives the right to appeal the District Court's Order. Thomas v. Arn, 474 U.S. 140 (1985); Small v. Secretary of Health and Human Services, 892 F.2d 15 (2d Cir. 1989); Wesolek v. Canadair Limited, 838 F.2d 55 (2d Cir. 1988).
Let the Clerk send a copy of this Report and Recommendation to the attorneys for the Plaintiff and the Defendants.
SO ORDERED.