Summary
In Pineau, one of the defendants, Jean Pineau, was charged along with various other co-defendants with 1 count of conspiracy to commit mail fraud, 33 counts of mail fraud, one count of conspiracy to launder funds, and one count of conspiracy to impede the IRS in collection of taxes.
Summary of this case from U.S. v. ConeyOpinion
Criminal Action No. 01-239, Section "N"
December 9, 2002
ORDER AND REASONS
Before the Court is the Joint Motion and Incorporated Memorandum of Defendants Ann Pineau and Jean Noel Pineau for a Severance. For the reasons that follow, the motion is GRANTED IN PART, in that it is granted as to Ann Pineau, and DENIED IN PART, in that it is denied in all other respects.
I. BACKGROUND
In a second superseding indictment (the "indictment"), the government has charged five defendants (Jean Noel Pineau, Craig Brown, Richard Rienstra, Joseph Aguda, and Cedric Vaumoron) with taking part in a scheme to defraud investors by selling promissory notes "guaranteed" by New England International Surety, Inc. ("New England") and OMNE RE S.A., a subsidiary of New England. Count 1 of the indictment charges all five of these defendants with conspiracy to commit mail fraud for the purpose of executing this scheme. Counts 2 through 34 charge four defendants (Brown, Rienstra, Aguda, and Jean Pineau) with actual mail fraud. Count 35 charges these same four with conspiracy to launder funds received from the sale of the notes. Count 36 charges Jean Pineau and Craig Brown with conspiracy to impede the Internal Revenue Service in the collection of corporate and personal income taxes. Counts 37 and 38 charges Jean Pineau and his wife, Ann Pineau, with personal income tax evasion. Count 39 charges Craig Brown with personal income tax evasion.
II. LAW AND ANALYSIS
Ann and Jean Pineau have filed a joint motion seeking to have the tax evasion charges against them (Counts 37 and 38) and the tax conspiracy charge against Jean Pineau and Craig Brown (Count 36) tried separately from the rest of the case. Under Rule 8(b) of the Federal Rules of Criminal Procedure, the government may charge two or more defendants in the same indictment only "if they are alleged to have participated in the same act or transaction, or in the same series of acts or transactions, constituting an offense or offenses." Fed.R.Crim.P. 8(b). Even where joinder is technically proper, Rule 14 gives the Court discretion to order separate trials if the joinder appears to prejudice a defendant. See Fed.R.Crim.P. 14(a) ("If the joinder of offenses or defendants in an indictment . . . appears to prejudice a defendant or the government, the court may order separate trials of counts, sever the defendants' trials, or provide any other relief that justice requires."). "[W]hen defendants properly have been joined under Rule 8(b)," however, a court "should grant a severance under Rule 14 only if there is a serious risk that a joint trial would compromise a specific trial right of one of the defendants, or prevent the jury from making a reliable judgment about guilt or innocence." Zafiro v. United States, 506 U.S. 534, 539 (1993).
A single indictment may charge a defendant with two or more offenses provided that "the offenses charged . . . are of the same or similar character, or are based on the same transaction, or are connected with or constitute parts of a common scheme or plan." Fed.R.Crim.P. 8(a).
A. Jean Pineau:
The Court finds that charges against Jean Pineau properly have been joined and that his joinder with the other conspiracy defendants is likewise proper. These defendants (J. Pineau, Brown, Rienstra, Aguda, and Vaumoron) are alleged to have participated in the same series of acts related to the sale of promissory notes "guaranteed" by New England and Omne RE. Indeed, Jean Pineau is charged in each count of the indictment, except for Count 39, which charges Craig Brown with evasion of personal income tax. Each of these charges is alleged to be part of a common scheme: mail fraud and conspiracy to commit mail fraud in selling the notes (Counts 1 through 34); conspiracy to launder the funds received from the sale of the notes (Count 35); and conspiracy to impede the collection of taxes, including those due on proceeds from the sale of the notes (Count 36). The Court finds that the tax conspiracy count has a sufficient nexus with the fraud and money laundering conspiracies. This count includes allegations of (1) failing to provide Forms 1099 or W-2 to brokers who earned commissions on the sale of the notes; (2) filing false documents on behalf of New England and OMNE S.R.L. Inc., claiming exemption from United States tax laws; (3) instructing clients that the payments they received were not taxable income and that OMNE would not send any documentation to the tax authorities regarding such payments; (4) creating a fictitious Form W-2 for Jean Pineau; and (5) personal income tax evasion by Jean Pineau and Craig Brown.
Although the personal income tax evasion charges (Counts 37 through 39) are less obviously connected to the fraud and money laundering conspiracy charges, Jean Pineau's and Craig Brown's alleged acts in this regard are alleged to be part of the tax conspiracy, which is connected to the other counts in several ways. Thus, the Court does not find the joinder of the charges against Jean Pineau to be improper in any respect. See Fed.R.Crim.P. 8(a) and (b).
Nor does the Court find any basis for a discretionary severance as to Jean Pineau under Rule 14. Mr. Pineau has pointed to no prejudice that he likely will suffer as a result of having the tax charges tried together with the other counts of the indictment, other than to state generally that the evidence on both the tax and the fraud charges will be "highly technical." See Motion at p. 5. He has made no showing that joinder of the tax charges will in any way impede the jury's ability to make a reliable judgment as to his guilt or innocence on each separate offense. Accordingly, the motion is denied as to Jean Noel Pineau.
B. Ann Pineau:
Unlike her husband, who is charged in nearly every count of the indictment, Ann Pineau is not alleged to have participated in any of the acts or transactions set forth in Counts 1 through 36. This is not a case of an alleged minor player who risks being tainted by the evidence against his co-conspirators — Ann Pineau is not alleged to have played even a minor role in any conspiracy or scheme. She is charged strictly with personal income tax evasion and nothing more. Because Ann Pineau is not "alleged to have participated in the same act or transaction, or in the same series of acts or transactions" as the other defendants (with the exception of her husband on the income tax charge), her joinder exceeds the limits of Rule 8(b).
The Court makes no decision today as to whether Jean Pineau should be joined in the trial of Ann Pineau on the tax evasion charges. Neither side addressed in its briefing its preferences in the event the Court granted the motion as to one movant only. The Court notes that joinder of these two defendants on Counts 37 and 38 would be proper under Rule 8(b), provided these counts were severed from the other counts in the indictment.
Moreover, even if her joinder were permissible under Rule 8, the Court nevertheless would order a separate trial for Ann Pineau, for she has demonstrated a serious risk that a joint trial would prevent the jury from making a reliable judgment about her guilt or innocence. See Zafiro, 506 U.S. at 539; see also United States v. Edmond, 935 F.2d 1511, 1517 (7th Cir. 1991) ("[N]ot granting [Mrs. Edmond's] severance motion . . . tested the ability of jurors not to tar [Mrs. Edmond] with the broad brush applied to her husband and his codefendants. . . . [J]ustice would have been better served by trying [Mrs. Edmond] on the tax counts (either alone or with her husband) in a separate proceeding."). The government argues that "[b]ecause Ann Pineau financially benefitted from the fruits of the underlying fraudulent crimes, she cannot claim, and has not shown, prejudice from being charged with those who committed those crimes." Opp. Memo. at p. 8. The government has made Ms. Pineau's case for her. The trial on the conspiracy charges is expected to last two to three weeks, with many elderly victims as witnesses. There is a serious risk that Ann Pineau would be tarred with the evidence against her husband and the other defendants even though she is not alleged to have participated any of the alleged fraud or conspiracies.
III. CONCLUSION
Accordingly, for the foregoing reasons, IT IS ORDERED that the Joint Motion and Incorporated Memorandum of Defendants Ann Pineau and Jean Noel Pineau for a Severance is GRANTED IN PART, in that it is granted as to Ann Pineau, and DENIED IN PART, in that it is denied in all other respects.