Opinion
CRIMINAL ACTION NO. 1:06-CR-0172-02-TWT-CCH (Superseding).
February 20, 2007
ORDER FOR SERVICE OF REPORT AND RECOMMENDATION
Attached is the Report and Recommendation of the United States Magistrate Judge in this action in accordance with 28 U.S.C. § 636(b)(1) and this Court's Criminal Local Rules 12.1(E) and 58.1(A)(3).
Pursuant to 28 U.S.C. § 636(b)(1), each party may file written objections, if any, to the Report and Recommendation within ten (10) days of service of this Order. Should objections be filed, they shall specify with particularity the alleged error or errors made (including reference by page number to the transcript if applicable) and shall be served upon the opposing party. The party filing objections will be responsible for obtaining and filing the transcript of any evidentiary hearing for review by the District Court. If no objections are filed, the Report and Recommendation may be adopted as the opinion and order of the District Court and any appellate review of factual findings will be limited to a plain error review. United States v. Slay, 714 F.2d 1093 (11th Cir. 1983).
The above-referenced ten (10) days allowed for objections, plus three days for mailing, is EXCLUDED from the computation of time under the Speedy Trial Act. 18 U.S.C. § 3161(h)(1)(F). The Clerk is directed to submit the Report and Recommendation with objections, if any, to the District Court after expiration of the above time period.
IT IS SO ORDERED
REPORT AND RECOMMENDATION ON MOTION TO DISMISS FOR DUPLICITY [307] AND MULTIPLICITY [308]
Defendant is charged in the Superseding Indictment with conspiracy (Count 1), bank loan application fraud (Counts 6-8, 10-13 and 16), mail fraud (Counts 23-26, 28-29 and 32), wire fraud (Counts 42-44, 46-48 and 51), and bank fraud (Counts 59-61, 63-66 and 69). This action is before the Court on Defendant's Motion to Dismiss Duplicitous Bank Loan Fraud, Wire Fraud, Mail Fraud, and Bank Fraud Counts ("Duplicity MTD") [307] and Motion to Dismiss Multiplicitous Bank Loan Fraud, Wire Fraud, Mail Fraud, and Bank Fraud Counts ("Multiplicity MTD") [308]. Defendant argues that these counts should be dismissed because they are both duplicitous and multiplicitous.I. BACKGROUND
The 93-count Superseding Indictment in this case charges that Defendant Bobo, along with fourteen co-Defendants, devised and executed a scheme to defraud mortgage companies and federally-insured banks. Superseding Indictment ("Indictment") [164] ¶ 2. According to the Indictment, Defendants obtained fraudulent appraisals of residential properties, inflating property values for the purpose of defrauding lenders. Id. ¶ 3. Defendant Bobo, a Certified Real Estate Appraiser, allegedly prepared and submitted nine of the 59 fraudulent property appraisals that were used to obtain loans at inflated values. Id. ¶ 4.Count One charges all Defendants with conspiracy, and the 92 additional counts charge individual Defendants with bank loan application fraud, mail fraud, wire fraud, bank fraud and money laundering. In the motions to dismiss now under consideration, Defendant Bobo attacks four of the five substantive charges: bank loan application fraud, mail fraud, wire fraud, and bank fraud. While Counts Two through 18 charge Defendant with bank loan application fraud in violation of 18 U.S.C. § 1014, Defendant Bobo is charged only in Counts 6-8, 10-13, and 16. While Counts 19 through 37 charge mail fraud in violation of 18 U.S.C. § 1341, Defendant Bobo is named only in Counts 23-26, 28, 29 and 32. While Counts 38 through 54 charge wire fraud in violation of 18 U.S.C. § 1343, Defendant Bobo is charged only in Counts 42-44, 46-48 and 51. Finally, while Counts 55-71 charge bank fraud in violation of 18 U.S.C. § 1344, Defendant Bobo is named only in Counts 59-61, 63-66 and 69. Id.
Bobo is not charged in the substantive money laundering counts.
The bank loan application fraud counts allege that Defendants "prepared [and] submitted . . . documents which contained false statements and reports and willfully overvalued land, property and security for the purpose of influencing the action of . . . financial institutions." Indictment ¶ 5. Those counts also include charges that Defendants violated 18 U.S.C. § 2, which states that individuals who aid or abet a principal to a crime can be liable as principals.
The mail fraud counts allege that Defendants mailed packages "for the purpose of executing and attempting to execute" the scheme to defraud. Indictment ¶ 8. Those counts also include charges that Defendants violated 18 U.S.C. § 2, which states that individuals who aid or abet a principal to a crime can be liable as principals.
The wire fraud counts allege that Defendants caused interstate wire transfers in furtherance of the scheme to defraud. Indictment ¶ 11. Those counts also include charges that Defendants violated 18 U.S.C. § 2, which states that individuals who aid or abet a principal to a crime can be liable as principals.
The bank fraud counts allege that Defendants made false representations in the form of fraudulent appraisals. Indictment ¶ 14. Those counts also include charges that Defendants violated 18 U.S.C. § 2, which states that individuals who aid or abet a principal to a crime can be liable as principals.
II. DISCUSSION
A. Duplicity
Defendant first moves to dismiss the Indictment on the grounds that the substantive counts of bank loan application fraud, mail fraud, wire fraud and bank fraud are duplicitous. Duplicity is found in a criminal indictment when several "distinct and separate" offenses are joined in a single count. 1A Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 142 (3d ed. 1999); see United States v. Ramos, 666 F.2d 469, 473 (11th Cir. 1982). If a defendant is indicted under separate offenses, separate counts should be used for each offense; the failure to do so is duplicitous. See, e.g., United States v. A.P. Woodson Co., 198 F.Supp. 582, 586 (D.C.D.C. 1961) (holding an indictment was duplicitous where a single count charged a defendant with violating both the Sherman Act and the Clayton Act); United States v. Gibson, 310 F.2d 79, 80 n. 1 (2nd Cir. 1962) (holding an indictment was duplicitous where a single count charged a defendant, on the basis of one drug transaction, with failing to pay a special tax to import marijuana and selling illegally imported narcotics). The danger of duplicity is that it may compel a jury to find a defendant guilty of two offenses rather than one, simply because both criminal offenses are charged within one count. See United States v. Garcia, 400 F.3d 816, 819 (9th Cir. 2005).
In order to determine whether an indictment count is duplicitous, courts look to whether multiple, separate offenses are charged within that count. Whether offenses are separate, in turn, is governed by whether each offense requires proof of an element that the other does not. See Blockburger v. United States, 284 U.S. 299, 304 (1932). When the answer to the above inquiry is unclear, doubt is generally resolved in favor of consolidating several counts into one, so as to avoid multiple punishments for the same conduct. See United States v. Chipps, 410 F.3d 438, 447-48 (8th Cir. 2005).
In his Duplicity MTD, Defendant contends that the Indictment is duplicitous, but he does not explain why. He identifies no specific count that he believes includes multiple offenses, but instead presents several arguments unrelated to the issue of duplicity. Because Defendant has failed to state why he believes the Indictment is duplicitous, out of an abundance of caution, the Court will examine the potential arguments Defendant could have made for duplicity, as well as the tangential argument he raises in his briefs.
At the outset, the Court cautions that dismissal is not a proper remedy for duplicity. See United States v. Droms, 566 F.2d 361, 363 (2nd Cir. 1977); United States v. Ramirez-Martinez, 273 F.3d 903, 913 (9th Cir. 2001). Instead, if an indictment count is duplicitous because it joins several separate offenses in one count, the error can be cured by splitting the offenses into separate counts. See Trounce v. State, 498 P.2d 106, 111 (Alaska 1972). Thus, if the Court were to find that the Indictment's substantive counts were indeed duplicitous in this case, their dismissal would not be the appropriate remedy. Instead, the Court would recommend the creation of separate charges; given his Multiplicity MTD, however, it seems unlikely that, despite his Duplicity MTD, Defendant wants what he is asking for.
Upon reviewing the Indictment, the undersigned can identify two potential arguments regarding duplicity. Neither is meritorious. First, Defendant could argue that the substantive charges of bank loan application fraud, mail fraud, wire fraud and bank fraud are duplicitous because each of the counts under those charges alleges that Defendant violated more than one criminal statute. Specifically, each substantive count charges Defendant with violating not only the U.S. Code statute relevant to each of the substantive offenses, but also 18 U.S.C. § 2 ("Section 2").
Section 2 governs the liability of aiders and abettors as principals, stating that "[w]hoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal." The inclusion of Section 2 serves only to extend the liability of principals to those who aid and abet a principal. Because the addition of Section 2 does not place additional liability on the same conduct, but merely serves to clarify why each Defendant is criminally liable, the Court finds that the charging of both criminal provisions inside one count is not duplicitous. See Baumann v. United States, 692 F.2d 565, 571-72 (9th Cir. 1982) (holding an indictment was not duplicitous for including Section 2 along with another statute in a substantive count, because Section 2 "provides a means of establishing liability but does not itself define a crime").
Furthermore, while each substantive count of the Indictment cites two statutes, each count refers only to an individual property, mailing, wire transfer, or monetary transaction, without combining transactions or properties.
Defendant might argue, secondly, that the Indictment is duplicitous because it joins many Defendants in the same charging document. This argument lacks merit as well. Rule 8(b) of the Federal Rules of Criminal Procedure explicitly permits an indictment to charge multiple defendants together "if they are alleged to have participated in the same act or transaction," as the fifteen Defendants in the case at bar are alleged to have done. Fed.R.Crim.P. 8(b). The Court thus finds no duplicity on the basis of this argument. In fact, the Court can identify no legitimate grounds for concluding that the Indictment in this case is duplicitous.
While not pointing to an allegedly duplicitous count in his Duplicity MTD briefs, Defendant uses the occasion to reargue his contention made in his Motion to Dismiss the Indictment for Failure to State Offenses ("Rule 7 Motion") [306]. He contends that Counts Two through 69 of the Indictment are flawed because they incorporate by reference language from Count One, an argument that relates only tangentially to the pleading of two or more offenses in one count.
Defendant objects that the Superseding Indictment's charges of bank loan application fraud, mail fraud, wire fraud and bank fraud incorporate allegations of overt acts stated in more detail in Count One. Duplicity MTD at page 4; see, e.g., Indictment ¶ 7 ("The scheme and artifice to defraud and to obtain money by means of materially false and fraudulent representations and promises is more particularly described in [Count One] of this Indictment, and the Grand Jury realleges and incorporates [that count] as if fully set forth herein."). Defendant contends that one element necessary to all four of the above substantive counts is the existence of fraud. Duplicity MTD at pages 3-4. He then complains that it is improper for the only evidence of this fraud element to be incorporated into the substantive counts by reference from Count One. Id.
Defendant is factually wrong in contending that the bank loan application fraud counts incorporate all or part of Count One.
The Court finds that Defendant's objection to the incorporation of allegations has no merit. Rule 7(c)(1) of the Federal Rules of Criminal Procedure specifically permits allegations from one count to be incorporated by reference into another count, so that the applicable facts need not be restated in each count. Fed.R.Crim.P. 7(c)(1) ("A count may incorporate by reference an allegation made in another count."). Defendant points to no contrary authority suggesting that the Indictment's referral to allegations in Count One would be improper in this case, thus the Court declines to find error in this cross-reference. See also discussion at pages 12-14 of this Court's Report Recommendation of February 16, 2007, denying Defendant's Rule 7 Motion based in part on the permissibility of cross-referencing. Report Recommendation [413].
In sum, the Court can identify only two potential arguments with regard to duplicity: first, that Defendant should not be charged in one count with violations of both a substantive criminal statute as well as 18 U.S.C. § 2, and second, that he should not be charged along with the other fourteen co-Defendants in one indictment. As discussed above, the Court finds no merit in either of these potential objections. Defendant makes no arguments of his own regarding duplicity, and his unrelated argument concerning incorporation of allegations by reference also lacks merit. Moreover, if the Indictment were duplicitous, dismissal would not be the proper remedy. For these reasons, the Court RECOMMENDS that Defendant's Duplicity MTD [307] be DENIED.
See discussion, supra page 6.
B. Multiplicity
Defendant also moves to dismiss on the grounds that the Indictment is multiplicitous. Multiplicity occurs when a single offense is charged in several counts. 1A Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 142 (3d ed. 1999). The danger of multiplicity is that where one criminal act is punished across several counts, the jury may believe the defendant has committed more criminal acts than he actually has, or the defendant may receive multiple sentences for one crime. United States v. Smith, 231 F.3d 800, 815 (11th Cir. 2000).
Like duplicity, multiplicity in an indictment does not require the entire indictment to be dismissed; instead, the appropriate remedy for multiplicity calls for consolidating a multiplicitous charge into one count, or issuing special instructions to the jury. See Wright Miller at § 142. Thus, if the Indictment in this case were indeed multiplicitous, Defendant's requested dismissal would not be the appropriate way to remedy that error.
To determine whether multiple counts of an indictment are multiplicitous, courts look to whether the counts charge a single offense or "distinct and separate" offenses. See United States v. Langford, 946 F.2d 798, 802 (11th Cir. 1991). Multiple counts are not multiplicitous when they all stem from a statute that creates several different offenses. See, e.g., United States v. Martinez-Gonzales, 89 F.Supp. 62, 64-65 (D.C. Cal. 1950). Similarly, a substantive offense and conspiracy to commit that offense may be charged separately without being multiplicitous, because conspiracy and a completed offense are considered to constitute separate crimes. Iannelli v. United States, 420 U.S. 770, 777-78 (1975).
Defendant claims that the bank loan application fraud, mail fraud, wire fraud and bank fraud charges in the Indictment are multiplicitous. Multiplicity MTD at page 1. He offers two main arguments in support of his claim. First, he contends that the substantive counts are multiplicitous because they all rely on the same scheme discussed in Count One to establish a common element. In his second, related argument, Defendant contends that the substantive charges all rely on the same underlying acts to charge Defendant with multiple offenses. The Court examines each argument in turn.
First, Defendant objects that the Indictment's substantive counts all cross-reference the same scheme to defraud from Count One to establish the common fraud element. Id. at page 3. He argues that the cross-referencing of the same facts from Count One is multiplicitous. There is no authority, however, that prohibits incorporation by reference. In fact, under Rule 7(c)(1), indictment counts may cross-reference other counts rather than continually restate the applicable facts. Fed.R.Crim.P. 7(c)(1) ("A count may incorporate by reference an allegation made in another count."). Moreover, Defendant has pointed to no authority that says counts cannot have elements or proof in common.
See supra n. 7.
Defendant next argues that the actions underlying the bank loan application fraud, bank fraud, wire fraud and mail fraud charges are the same; that is, that all charges allege that he prepared the same false appraisals and submitted them to the same banks, thereby defrauding the same financial institutions of the same money. Multiplicity MTD at pages 3-4, 9. In essence, he objects because he believes he is being punished in multiple counts for the same criminal conduct. He characterizes the fraudulent property appraisals he allegedly prepared as "a single set of acts," and argues that they should therefore be charged against him as a single offense only. Id. at page 10.
Whether a single act may be punished under several statutes across multiple counts is generally evaluated under the Blockburger test. Blockburger, 284 U.S. 299. In Blockburger, the defendant was convicted in two counts for one drug transaction: he was convicted in one count of selling a drug not in its original packaging, and in another of selling the same drug without a written order of the purchaser. Id. at 301. The Supreme Court in that case announced the general test to be applied when a defendant is accused of committing two offenses on the basis of the same act: "The applicable rule is that, where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one is whether each provision requires proof of an additional fact which the other does not." Id. at 304 (emphasis added). As the offense in the one count of that case (selling a drug outside its original packaging) and the offense in the other (selling a drug without the purchaser's order) each required an additional element of proof that the other did not, the Blockburger Court concluded that the defendant was properly convicted under both counts.
The general principle underlying the Blockburger test, of course, is that a criminal defendant should not be punished twice for committing only one offense. See Whalen v. United States, 445 U.S. 684, 692 (1980). Applying this principle and the Blockburger test to the bank loan application fraud and bank fraud charged in this case, it appears that those two charges are not multiplicitous. As the Second, Fifth, Seventh and Ninth Circuits have held, bank fraud requires an element that bank loan application fraud does not: bank fraud requires the execution (or attempted execution) of a "scheme or artifice" to defraud; bank loan application fraud does not. On the other hand, § 1014 requires that a false statement be made to obtain a loan or advance; bank fraud does not. United States v. Abu-Shawish, 175 Fed.Appx. 41, 44 (7th Cir. 2006) (not reported); United States v. Chacko, 169 F.3d 140, 148 (2nd Cir. 1999); United States v. Dupre, 117 F.3d 810, 818 (5th Cir. 1997); United States v. Nash, 115 F.3d 1431, 1438 (9th Cir. 1997). Additionally, the Ninth Circuit points to the element of materiality that is required in § 1344 but not § 1014. Nash, 115 F.3d at 1438. Because each statute requires proof of an element that the other does not, the two offenses are separate under Blockburger, and under that test, are not multiplicitous.
The Indictment itself reflects that a "scheme or artifice" to defraud is not an element of bank loan application fraud: the bank loan application fraud charge does not incorporate the "scheme to defraud" described in Count One, while the bank fraud charge does.
The Supreme Court has clarified that "materiality" is an implied element of § 1344, but is not an element of § 1014. See Neder v. United States, 527 U.S. 1, 25 (1999); United States v. Wells, 519 U.S. 482, 491-92 (1997).
The remaining two offenses — mail fraud and wire fraud — are also separate offenses, as each one requires an element of proof that the other does not: mail fraud requires the use of an interstate mail carrier to perpetrate the offense, while wire fraud requires transmission of messages by wire to carry out the offense. See 18 U.S.C. §§ 1341, 1343. The separate charges of wire fraud and mail fraud thus are not multiplicitous as to each other (or, for that matter, to the bank loan application fraud or bank fraud charges).
With respect to the bank loan application fraud and bank fraud charges, however, Defendant argues that resorting to the Blockburger test is unnecessary because Congress specifically made its intentions clear with regard to multiple counts for violations of the bank loan application fraud statute ("§ 1014") and the bank fraud statute ("§ 1344"). In particular, Defendant argues that Congress intended for bank fraud and bank loan application fraud to be charged under the more expansive language of the bank fraud statute, § 1344, when conduct might otherwise fall under both statutes. See Reply to Government's Response to Defendant's Motion to Dismiss Multiplicitous Bank Loan Fraud, Wire Fraud, Mail Fraud, and Bank Fraud Counts ("Multiplicity Reply Br.") [391] at pages 1-2.
Defendant cites legislative history for § 1344, in which the Senate Committee on the Judiciary explained that § 1344 should be enacted because fraud on federally insured banks was becoming harder to prosecute using § 1014. See S. Rep. No. 98-225, pt. G (1983). Defendant argues that this indicates § 1014 was intended to be subsumed in § 1344, such that wherever both statutes are applicable, only § 1344 would apply. Defendant also cites a Second Circuit case in support of his characterization of § 1344's legislative history. In that case, Seda v. United States, 978 F.2d 779 (2nd Cir. 1992), the same conduct was charged in two separate counts under both § 1014 and § 1344. The court held that the counts were multiplicitous. Seda, 978 F.2d at 782.
As the Government points out, however, Seda was overruled several years later in United States v. Chacko, 169 F.3d 140 (2nd Cir. 1999). In Chacko, the Second Circuit applied the Blockburger test and concluded that § 1344 requires proof of an element that § 1014 does not, and vice versa. Chacko, 169 F.3d at 148 ("Section 1344 requires a scheme or artifice, while § 1014 does not. Section 1014 requires that a false statement be made to obtain a loan or advance, while § 1344 has no such requirement.") (internal quotation marks omitted).
One might question whether the Blockburger test should be applied when, as here, despite the different potential elements in § 1344 and § 1014, the facts being charged are identical (Defendant's "scheme or artifice" under § 1344 was the false statement under § 1014). That, however, was the precise factual scenario in Blockburger. In Blockburger, count three charged a sale of a drug not in its original package in violation of one section of a statute, and count five charged a violation of another part of the same statute (sale made without a written order). Both charges arose out of the same sale; that is, the facts forming the basis for each count were identical. Because the legal elements of each charge were different, however, the Court held that a single act could support both counts. That is precisely the issue in this case. Defendant Bobo is charged in more than one count on the basis of the same conduct. Thus, this case is controlled by Blockburger and the separate substantive counts are not multiplicitous.
Finally, the Court notes that the most authoritative discussions of this precise issue before it are the Second Circuit's opinion in Chacko, the Fifth Circuit's opinion in Dupre, the Seventh Circuit's opinion in Abu-Shawish, and the Ninth Circuit's opinion in Nash. Abu-Shawish, 175 Fed.Appx. at 44; Chacko, 169 F.3d at 148; Dupre, 117 F.3d at 818; Nash, 115 F.3d at 1438. In all four of these cases, the circuit courts concluded that bank loan application fraud and bank fraud are separate offenses, and therefore, that the same conduct could be punished under both § 1014 and § 1344 and the separate counts in an indictment that did so would not be multiplicitous. In the absence of any authority to the contrary, this Court recommends that those cases be followed and that bank loan application fraud and bank fraud charges in the case at bar be found not to be multiplicitous.
Other than Seda, which has been overruled, the Court is not aware of any appellate cases holding that § 1014 and § 1344 are, in fact, multiplicitous.
With respect to the remaining two substantive charges that Defendant attacks, mail fraud and wire fraud, Defendant cites no case law suggesting that they might be multiplicitous when charged along with § 1014 and § 1344. The Court thus finds no reason to deviate from the result of the Blockburger test. Defendant does argue, however, that the reasoning of United States v. Langford, 946 F.2d 798 (11th Cir. 1991), should be extended to this case to support the finding that the mail fraud and wire fraud counts are multiplicitous because they are based on the same false statements and fraud. Multiplicity MTD at page 9. In Langford, the Eleventh Circuit held that multiple counts of securities fraud were multiplicitous where they were all based on the same scheme and the same fraudulent purchase, and there was no indication that each mailing was related to a separate transaction. Langford, 946 F.2d at 804. Langford is distinguishable from the case at bar for two reasons. First, the Eleventh Circuit specifically noted that where the mail is used on separate occasions for the purpose of furthering separate fraudulent transactions, multiple counts of mail fraud under § 1341 may be alleged. Id. at 804. While there was no indication in Langford that the separate mailings were related to separate fraudulent transactions, there is evidence in the present case that indicates packages were sent through the mail on multiple occasions, and that those packages related to separate purchases of different pieces of real estate. See Indictment ¶ 8. Thus, Langford is readily distinguishable.
Additionally, the Court finds that the mail fraud and wire fraud charges are distinct offenses from each other (and from the bank loan application fraud and bank fraud charges), and Defendant has presented no persuasive authority to the contrary. Moreover, even if the Indictment were multiplicitous, dismissal would not be the proper remedy. For these reasons, the Court RECOMMENDS that Defendant's Multiplicity MTD [308] be DENIED.
See discussion, supra page 6.
III. RECOMMENDATION
IT IS SO RECOMMENDED.
RECOMMENDS DENIED.