Opinion
S2-10-CR-363 (GBD)
07-18-2011
UNITED STATES OF AMERICA, v. MICHAEL YARON, MOSHE BUCHNIK, SANTO SAGLIMBENI, EMILIO A/K/A "TONY" FIGUEROA, CAMBRIDGE ENVIRONMENTAL & CONSTRUCTION CORP., D/B/A NATIONAL ENVIRONMENTAL ASSOCIATES, OXFORD CONSTRUCTION & DEVELOPMENT CORP., and ARTECH CORP., Defendants.
MEMORANDUM DECISION AND ORDER
:
Defendants Michael Yaron, Cambridge Environmental & Construction Corp., doing business as National Environmental Associates, and Oxford Construction & Development Corp. (collectively the "Yaron Defendants"), Santo Saglimbeni and Artech Corp. (collectively the "Saglimbeni Defendants"), and Defendants Moshe Buchnik and Emilio a/k/a "Tony" Figueroa move: (1) to dismiss all Counts of the Superseding Indictment for failure to allege a federal offense; (2) to dismiss Count Two of the Superseding Indictment as barred by the statute of limitations; (3) to sever various Counts and defendants; (4) for a bill of particulars; and (5) to compel an early disclosure of witness statements pursuant to 18 U.S.C. § 3500 and statements the Government intends to use at trial.
Defendants filed individual motions seeking similar forms of relief and joined in each others' motions where applicable. The extent to which these motions diverge or overlap is addressed below. This memorandum decision and order does not address Defendants' motions for a bill of particulars, early disclosure of Jencks materials, and disclosure of the statements the Government intends to use at trial.
Background
On April 27, 2010, a federal grand jury returned an Indictment charging the Yaron and Saglimbeni Defendants, as well as Buchnik and Figueroa, with conspiracies and fraud related charges in violation of 18 U.S.C. §§ 1341, 1343, 1349. See Docket #1. The Original Indictment charged defendants with two conspiracies to defraud New York Presbyterian Hospital ("NYPH"): one relating to the award of asbestos removal, air monitoring and construction contracts (the "Asbestos/Construction Conspiracy"), and another relating to the award of heating, ventilation, and air conditioning contracts (the "HVAC Conspiracy"). See id. The Government superseded the indictment on October 26, 2010. See Docket #40 (the "Superseding Indictment"). The Superseding Indictment: (1) added, to each Count, a charge of "honest services" fraud in violation of 18 U.S.C. § 1346; (2) added Figueroa to the Asbestos/Construction conspiracy charged in Count One; and (3) added aiding and abetting as an alternate theory of liability to Counts Two and Four. Id.
A second Superseding Indictment was filed on June 16, 2011 to correct typographical errors contained in the first Superseding Indictment.
1. The Asbestos/Construction Conspiracy
The Asbestos/Construction Conspiracy is set forth in Count One and alleges that Defendant Saglimbeni, in his role as Director and then Vice President of Facilities Operations at NYPH, and Defendant Figueroa, in his role as Building Systems Manager and then Director of Facilities Operations at NYPH, conspired with Buchnik, the Yaron Defendants and others to devise a scheme and artifice to defraud NYPH. Id. It was an object of this alleged conspiracy to commit wire fraud, in violation of Section 1343, in order to obtain money and property from NYPH by means of false and fraudulent pretenses and to deprive NYPH of its intangible right to the honest and faithful services of its employees through kickbacks, in violation of Section 1346. Id.
As part of the Asbestos/Construction Conspiracy, the Superseding Indictment alleges that from 2000 through about January 2008, Defendants Yaron and Buchnik paid kickbacks to Saglimbeni in order for Saglimbeni and, or, Figueroa to steer air monitoring services, asbestos abatement services, and construction services contracts to companies owned or controlled by them. Id. It is further alleged that around 2003, Saglimbeni created Defendant Artech to conceal the kickbacks he received from Yaron and Buchnik, who purportedly funneled payments through corporate and individual intermediaries to Artech for Saglimbeni's benefit. See id. at ¶¶ 28-29 (detailing the complex scheme to funnel kickbacks to Saglimbeni through Artech). Id. As overt acts in furtherance of this conspiracy, the Superseding Indictment charges that Defendants Yaron, Buchnik, and Saglimbeni caused Defendant Artech to deposit checks from third parties with bank accounts outside of New York into Artech's bank account within this District, and that Saglimbeni and Figueroa fraudulently caused NYPH to issue purchase orders awarding work to Defendants' companies, which were also located here. Id. Count Two of the Superseding Indictment charges all Defendants except Figueroa with the substantive offense of wire fraud, a violation of Section 1343, in furtherance of the conspiracy laid out in Count One. Id.
2. The HVAC Conspiracy
Count Three charges only Defendants Saglimbeni and Figueroa with conspiring to commit mail fraud, in violation of Sections 1341 and 1349, as part of a scheme or artifice to defraud NYPH in order to obtain money and property from NYPH and to deprive it of its intangible right to their honest and faithful services. Id. Specifically, the Superseding Indictment alleges that between June 2001 and June 2006, a co-conspirator paid kickbacks in the form of cash, goods and services to Saglimbeni and Figueroa in order to ensure that they would award HVAC contracts at NYPH to the co-conspirator's company. See id. at ¶ 42 (identifying the co-conspirator). As additional overt acts in furtherance of this conspiracy, both Saglimbeni and Figueroa are alleged to have caused NYPH to issue purchase orders to the co-conspirator's company, in some instances using U.S. mail from NYPH's offices in this District. Id. Count Four of the Superseding Indictment charges Saglimbeni and Figueroa with mail fraud in furtherance of the HVAC Conspiracy detailed in Count Three, alleging that the Defendants knowingly caused NYPH to mail a check for payment on work that was fraudulently awarded to the co-conspirator's company. Id.
Motions to Dismiss the Superseding Indictment
Rule 12(b)(2) of the Federal Rules of Criminal Procedure directs that a defendant "may raise by pretrial motion any defense, objection, or request that the court can determine without a trial of the general issue." Fed. R. Crim. P. 12(b)(2). Here, Defendants move to dismiss the Superseding Indictment, claiming that: (1) the honest service fraud charged in each Count is not a proper federal offense in light of the U.S. Supreme Court's recent decision in Skilling v. United States, 130 S. Ct. 2896, 2932 (2010); and (2) Counts Two and Four are barred by the statute of limitations.
See Yaron Mem. of Law 1 (Moving to dismiss Counts One and Two for failure to allege a federal criminal offense and Count Two as time-barred, while joining in applicable motions of codefendants); Buchnik Mem. of Law 5 (joining in the Yaron motion to the extent that it argues dismissal of honest services fraud objective of Counts One and Two); Saglimbeni Mem. of Law 2 (joining in Yaron motion to dismiss Counts One and Two and moving to dismiss Counts Three and Four under the same reasoning); Carrozza Affirm. 2 (requesting that Figueroa be deemed to have joined in all codefendants' motions pertaining to him).
In deciding a motion to dismiss under Rule 12(b), "a court must accept all factual allegations in the indictment as true." United States v. Thomas, 492 F. Supp. 2d 405, 412-13 (S.D.N.Y. 2007) (citation omitted). Furthermore, "[i]t is well settled that an indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." United States v. Alfonso, 143 F.3d 772, 776 (2d Cir. 1998) (quoting Hamling v. United States, 418 U.S. 87, 117 (1974)) (internal quotation marks omitted). Thus, "[t]o satisfy the pleading requirements of Fed. R. Crim. P. 7(c)(1), 'an indictment need do little more than to track the language of the statute charged and state the time and place (in approximate terms) of the alleged crime.'" United States v. LaSpina, 299 F.3d 165, 177 (2d Cir. 2002) (quoting United States v. Stavroulakis, 952 F.2d 686, 693 (2d Cir. 1992) (citations and internal quotation marks omitted). Moreover, "[a] court should not look beyond the face of the indictment and draw inferences as to proof to be adduced at trial, for 'the sufficiency of the evidence is not appropriately addressed on a pretrial motion to dismiss an indictment.'" Thomas, 492 F. Supp. 2d at 412-13 (quoting Alfonso, 143 F.3d at 776-77). 1. Motions to Dismiss for Failure to Allege a Federal Offense
"[I]n the rare circumstance in which the government 'has made what can fairly be described as a full proffer of the evidence it intends to present at trial,' the court may appropriately address 'the sufficiency of the evidence . . . on a pretrial motion to dismiss an indictment.' United States v. Gotti, 457 F. Supp. 2d 411, 421 (S.D.N.Y. 2006) (footnote citation omitted). Though the Court has heard argument on the parties' motions, this cannot be said to constitute a full proffer of the Government's evidence to be presented at trial. See, e.g., Alfonso, 143 F.3d at 777 ("The government's brief statement during oral argument [...] cannot fairly be described as a full proffer for purposes of a pretrial ruling on the sufficiency of the evidence.") (footnote omitted). Thus, the Court will not consider here the Government's evidence in determining the sufficiency of its allegations. See United States v. Perez, 575 F.3d 164, 166-67 (2d Cir. 2009) ("Defendants ... had no basis to challenge the sufficiency of the indictment before trial because it met the basic pleading requirements and was valid on its face.").
At the heart of Defendants' motions to dismiss is the claim that the payments underlying the allegations in the Superseding Indictment are merely "gratuit[ies] paid to an employee of [a] private party" and do not constitute honest service fraud pursuant to the U.S. Supreme Court's recent decision in Skilling v. United States, 130 S. Ct. 2896, 2932 (2010). See Yaron Mem. of Law 7; Saglimbeni Mem. of Law 2. Defendants claim the Government fails to allege "a practice of 'kicking back'" portions or percentages of awards "allegedly 'steered' or 'influenced'" to Oxford or Cambridge by Saglimbeni or Figueroa, or to allege that "particular payments were made 'in return' for specific awards to Oxford or Cambridge 'caused' by Saglimbeni or Figueroa," as required under Skilling. See Yaron Mem. of Law 6.
Under Skilling, the Superseding Indictment alleges a proper kickback scheme. See 130 S. Ct. at 2931; United States v. Bunn, 154 F.App'x. 227, 228 (2d Cir. 2005) ("a facially valid indictment [...] suffices to call for a trial on the merits of the charges set forth therein.") (citations omitted). In Skilling, the Court limited the scope of Section 1346 to criminalize "only the bribe-and-kickback core of the [...] case law." 130 S. Ct. at 2931 (emphasis in original) (footnote omitted). In so ruling, the Court expressly excluded "self-dealing" or "conflict-of-interest" types of prosecutions. See id. at 2932. While the Skilling decision served to limit the scope of Section 1346, it did not alter the application of Section 1346 to cases involving what the Court saw as "paradigmatic" kickback and bribery schemes. See id. at 2934 ("A criminal defendant who participated in a bribery or kickback scheme, in short, cannot tenably complain about prosecution under § 1346 on vagueness grounds."). Moreover, the Court reiterated the nature of the acts it perceived as falling into such schemes, citing to federal statutes "prohibiting - and defining - similar crimes" to do so. See id. at 2933-34. In particular, the Court favorably cited the definition of kickback in 18 U.S.C. § 52(2), as "'any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to [enumerated persons] for the purpose of improperly obtaining or rewarding favorable treatment in connection with [enumerated circumstances].'" See id. at 2933-34 (bracketed language in original) (footnote and additional citations omitted) (emphasis added). Most importantly, the Court noted that the overlap of Section 1346 with other federal statutes generally prohibiting bribery and kickbacks among federal public officials "does not render § 1346 superfluous," as Section 1346's "application to state and local corruption and to private-sector fraud reaches misconduct that might otherwise go unpunished." See id. at 2934, n.45 (emphasis added).
In interpreting Skilling, the Second Circuit has found that conduct that satisfies the definition of kickback found in 18 U.S.C. § 52(2) properly states an honest services fraud charge. See United States v. Nicolo, Nos. 09-0732-cr (L), 09-0821-cr (con), 09-0867-cr (con), 09-0847-cr (con), 2011 WL 1667085 at *4-5 (2d Cir. May 4, 2011). In Nicolo, the Second Circuit upheld a guilty plea for honest-services fraud, even though the defendant, a former town assessor, "explicitly disavowed . . . receiving a quid pro quo." Nicolo, 2011 WL 1667085 at *5. In upholding the plea, the Second Circuit reasoned the defendant had "freely acknowledged receiving money in connection with the assessment reductions...he had arranged" and that "[s]uch 'kickbacks' are sufficient to warrant prosecution under 18 U.S.C. § 1346." See id.
In opposition, Defendants cite to cases from other circuits defining kickback more narrowly. See, e.g., Yaron Mem. of Law 4, 8-9; United States v. Pelisamen, 641 F.3d 399, 405 (9th Cir. 2011) (citing Black's Law Dictionary to define kickbacks as involving "a return of a portion of a monetary sum received"); United States v. Porter, 591 F.2d 1048, 1054 (5th Cir. 1979) (holding a kickback to be "secret return to an earlier possessor of part of a sum received"); United States v. Hancock, 604 F.2d 999, 1002 (7th Cir. 1979) (finding kickbacks to involve "a percentage payment"). However, given the standard of review at this stage and the Second Circuit's recent interpretation of Section 1346, these precedents are unpersuasive. See Bunn, 154 Fed.Appx. at 228 (citations omitted); Thomas, 492 F.Supp.2d at 412-13 (citation omitted).
As Defendants acknowledge, the Superseding Indictment uses the word "kickback" nineteen times in framing its allegations. See Yaron Mem. of Law 4. More importantly, the Superseding Indictment specifically alleges activities that fall squarely within the meaning of "kickback" as defined by the U.S. Supreme Court and the Second Circuit. See, e.g., Superseding Indictment ¶¶ 25 ("[D]efendants Yaron and Buchnik paid kickbacks to [D]efendant Saglimbeni in order for Company-1 to be awarded asbestos abatement projects at NYPH"), 29 ("[D]efendants Yaron and Buchnik paid kickbacks to [D]efendant Saglimbeni in order for [D]efendant Oxford to be awarded construction services work at NYPH"), 46 ("CC-8 paid kickbacks in the form of cash, goods and services to [D]efendant Figueroa in order to ensure that [D]efendant Figueroa would award HVAC contracts at NYPH to CC-8's company"); see also 130 S. Ct. at 2933-34; Nicolo, 2011 WL 1667085 at *4-5. Defendants themselves argue that the alleged kickbacks constitute gratuities, which would still put them well within the definition of kickback as cited by the U.S. Supreme Court and the Second Circuit. See Yaron Mem. of Law 5-6; 130 S. Ct. at 2933-34 (citing favorably to a federal statute which defines kickback as "any . . . gratuity . . . which is provided, directly or indirectly, to [enumerated persons] for the purpose of improperly obtaining or rewarding favorable treatment in connection with [enumerated circumstances]."); Nicolo, 2011 WL 1667085 at *4-5. Thus, the Superseding Indictment properly alleges a kickback. See United States v. De La Pava, 268 F.3d 157, 162 (2d Cir. 2001) ("An indictment [...] need not be perfect, and common sense and reason are more important than technicalities.") (citing to United States v. Goodwin, 141 F.3d 394, 401 (2d Cir. 1997)).
Defendants also argue that the Superseding Indictment is flawed in that it fails to properly allege their intent to cause, or their actual causation of, financial injury to NYPH through their charged conduct. See Yaron Mem. of Law 10-11. As Defendants concede, the Second Circuit has expressly held under Section 1346, "actual or intended economic or pecuniary harm to the victim need not be established." United States v. Rybicki, 354 F.3d 124, 145 (2d Cir. 2003) (en banc) (citing United States v. Rybicki, 287 F.3d 257, 261 (2d Cir. 2002)). Instead, the Second Circuit, sitting en banc, held that "the only intent that need be proven in an honest services fraud is the intent to deprive another of the intangible right of honest services." Id. (quoting Rybicki, 354 F.3d at 262); see Superseding Indictment ¶¶ 23, 44. Furthermore, as to the likelihood of harm to result from a defendant's scheme or artifice under Section 1346, the Second Circuit held that:
[T]he misrepresentation or omission at issue for an 'honest services' fraud conviction must be 'material,' such that the misinformation or omission would naturally tend to lead or is capable of leading a reasonable employer to change its conduct.Id. at 145-46 (citation omitted). The Defendants' alleged actions were plainly the type that would alter the process by which NYPH awarded contracts. See, e.g., Superseding Indictment ¶¶ 22-33.
Accordingly, Defendants' motions to dismiss Counts One through Four of the Superseding Indictment for failure to allege a federal criminal offense are DENIED. 2. Motion to Dismiss Count Two as Time-Barred
The Yaron Defendants move to dismiss the second Count of the Superseding Indictment on the grounds that it is untimely. Defendants claim that Count Two of the Superseding Indictment, by adding the honest services fraud claims to the wire fraud claim contained in Count Two of the Original Indictment, fails to properly 'relate back' to that first indictment and thus fails to properly bring charges within the five year statute of limitations. See Yaron Def. Mem. of Law 11-17; 18 U.S.C. § 3282 (five year statute of limitations for relevant charges). Count Two of the original Indictment charges the Yaron Defendants, as well as Buchnik and the Saglimbeni Defendants with violating the federal wire-fraud statute, 18 U.S.C. § 1343, in carrying out the conspiracy to defraud NYPH. See Original Indictment ¶¶ 32-35. In support of the wire fraud charge, Count Two of the Original Indictment relies on ARTECH's deposit of a $71,500 check from Co-Conspirator 3's company account, taking place on approximately May 5, 2005. See id. at ¶ 35. Count Two of the Superseding Indictment relies on this same alleged wire fraud violation as the basis of its charges. See Superseding Indictment ¶ 37.
While the Original and first Superseding Indictments list Co-Conspirator 4's company as the source of this check, the second Superseding Indictment lists Co-Conspirator 3's company.
"Once an indictment is brought, the statute of limitations is tolled as to the charges contained in that indictment." United States v. Salmonese, 352 F.3d 608, 622 (2d Cir. 2003) (quoting United States v. Ben Zvi, 242 F.3d 89, 98 (2d Cir. 2001)) (additional citations omitted). Additionally, a superseding indictment that "supplants a pending timely indictment relates back to the original pleading and inherits its timeliness as long as the later indictment does not materially broaden or substantially amend the original charges." Id. (citing United States v. Gengo, 808 F.2d 1, 3 (2d Cir. 1986)). "In determining whether a superseding indictment materially broadens or amends the original charges, [the court] will consider whether the additional pleadings allege violations of a different statute, contain different elements, rely on different evidence, or expose the defendant to a potentially greater sentence." Id. (citing Ben Zvi, 242 F.3d at 55). While not determinative, courts will ultimately look to "whether the original indictment fairly alerted the defendant to the subsequent charges against him and the time period at issue." Salmonese, 352 F.3d at 622 (citing to Gengo, 808 F.2d at 3 (holding notice as the "touchstone" of the statute of limitations analysis)).
Other than the addition of the honest services fraud language, Count Two of the Superseding Indictment relies on the same factual allegations and nearly identical language in its charge. See Original Indictment ¶¶ 32-35 (incorporating paragraphs two through ten, thirteen through twenty and twenty-three through thirty of the Indictment); Superseding Indictment ¶¶ 34-37. Where, as here, the "allegations and charges are substantially the same in the old and new indictments, the assumption is that the defendant has been placed on timely notice [...] and should prepare a defense." See United States v. Grady, 544 F.2d 598, 601 (2d Cir. 1976) (citation omitted). Thus, the Superseding Indictment is timely and Defendants' motions to dismiss Count Two of the Superseding Indictment as time-barred are DENIED.
Defendants' Motions for Severance
Buchnik joins the Yaron Defendants' motion to sever Counts One and Two of the Superseding Indictment from Counts Three and Four, claiming the Asbestos/Construction conspiracy alleged in Counts One and Two and the HVAC conspiracy alleged in Counts Three and Four "do not arise from the same acts or transactions" and are therefore unable to be joined pursuant to Rule 8(b) of the Federal Rules of Criminal Procedure. See Buchnik Mem. of Law 2-3; Yaron Sev. Mem. 1-2; Fed. R. Crim. P. 8(b). The Yaron Defendants also argue that severance of those Counts is warranted pursuant to Rule 14 of the Federal Rules of Criminal Procedure because they will be prejudiced if tried with the Saglimbeni Defendants and Figueroa on Counts Three and Four. See Yaron Sev. Mem. 1-2; Fed. R. Crim. P. 14 (allowing a court to grant relief "[i]f the joinder of offenses or defendants in an indictment, an information, or a consolidation for trial appears to prejudice a defendant . . . ."). 1. Motions to Sever Counts One and Two from Counts Three and Four
Rule 8(b) provides that: "[t]he indictment or information may charge 2 or more defendants 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. The defendants may be charged in one or more counts together or separately. All defendants need not be charged in each count."
Defendants argue that the Asbestos/Construction Conspiracy is separate and distinct from the HVAC Conspiracy, making Defendants' joinder under Rule 8(b) impermissible. See Yaron Sev. Mem. 8-9. The Second Circuit has interpreted Rule 8(b) to permit joinder of defendants only when "two or more persons' criminal acts are unified by some substantial identity of facts or participants, or arise out of a common plan or scheme." See United States v. Rittweger, 524 F.3d 171, 177 (2d Cir. 2008) (citations and internal quotation marks omitted); see also United States v. Cervone, 907 F.2d 332, 341 (2d Cir. 1990); United States v. Attanasio, 870 F.2d 809, 815 (2d Cir. 1989); United States v. Turoff, 853 F.2d 1037, 1042-43 (2d Cir. 1988). Thus, unlike joinder of offenses under Rule 8(a), Rule 8(b) "does not permit joinder of defendants solely on the ground that the offenses charged are of the same or similar character." Turoff, 853 F.2d at 1042 (internal quotation marks omitted). Importantly, "[u]nless the standards set out in Rule 8(b) are met, a motion for severance should be granted even absent a showing of prejudice." United States v. Feyrer, 333 F.3d 110, 113 (2d Cir. 2003) (citing United States v. Lane, 474 U.S. 438, 449 n.12 (1986)).
"[W]hether the joinder of defendants in two conspiracies is warranted must be determined on a case-by-case basis," looking to the specific allegations contained in the indictment. Rittweger, 524 F.3d at 178, 178 n.3 (citations omitted) ("[T]he plain language of Rule 8(b) does not appear to allow for consideration of pre-trial representations not contained in the indictment . . . ."). Courts generally require a "fact specific analysis" to determine whether the charged conspiracies are "either (1) unified by some substantial identity of facts or participants, or (2) arise out of a common plan or scheme." See United States. v. Ohle, 678 F.Supp.2d 215, 224 (S.D.N.Y. 2010) (citations and internal quotation marks omitted). "The Second Circuit has noted that choosing the definitional frame of reference dictates whether joinder is proper in a given case." United States v. Rajaratnam, 753 F. Supp. 2d 299, 308 (S.D.N.Y. 2010) (quoting Turoff, 853 F.2d at 1039) (internal quotation marks omitted). Despite these distinct standards, "courts in [the Second] Circuit have interpreted and applied each standard in varying terms and have not formally distinguished between the two standards. See, e.g., Rajaratnam, 753 F. Supp. 2d at 304.
In light of the Rittweger Court's cautioning against considering pre-trial representations not included in the indictment, this Court will only rely on the facts as charged in the indictment. See Gov. Mem. in Opp. to Sev. 11-12.
Establishing a substantial identity of facts or participants does not require that all defendants be charged in the same conspiracy, "[p]rovided that the defendants 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 . . . ." See Rittweger, 524 F.3d at 178 (citation omitted) ("[M]embers of two or more conspiracies may be joined ... even where the members have not been charged as participating in one overarching conspiracy."). Even so, "two separate transactions do not constitute a series within the meaning of Rule 8(b) merely because they are of a similar character or involve one or more common participants." United States v. Lech, 161 F.R.D. 255, 256 (S.D.N.Y. 1995) (citation and internal quotation marks omitted); see Rajaratnam, 753 F. Supp. 2d at 308 ("[T]he mere existence of similarities between some of the actors or some of the crimes committed will not suffice under Rule 8(b).") (citation and internal quotation marks omitted). Generally, the Second Circuit looks to "whether a reasonable person would easily recognize the common factual elements that permit joinder. . . ." Rajaratnam, 753 F. Supp. 2d at 304 (quoting Turoff, 853 F.2d at 1044).
While "[t]he Second Circuit has elaborated less extensively on the 'common plan or scheme' standard," courts have found a common plan or scheme to exist between two conspiracies when "one scheme stemmed from the other" such that one scheme is "part and parcel" of the other, thereby providing "a sound basis for joinder under Rule 8(b)." Id. at 304 (in part, quoting Turoff, 853 F.2d at 1044). Moreover, "[k]nowledge of the other conspiracy is not required, but it is an indicator of whether or not there is a common scheme or purpose." Ohle, 678 F.Supp.2d at 225-26 (citing United States v. Menashe, 741 F. Supp 1135, 1138 (S.D.N.Y. 1990) (a plan cannot be "common" where a single defendant is the only one alleged to be aware of it)).
The Asbestos/Construction and HVAC conspiracies alleged in the Superseding Indictment do share some overlap of facts and participants. For example, Defendants Saglimbeni and Figueroa are alleged to have participated in both conspiracies. See Superseding Indictment ¶¶ 24, 33(c), 36, 43-48, 51-52. NYPH is the victim of both conspiracies. See id. at ¶¶ 23, 36, 44, 51. Lastly, the conspiracies are both alleged to have occurred over roughly the same period of time.
The Asbestos/Construction Conspiracy is alleged to have started "as early as 2000" and continued "through at least January 2008," while the HVAC Conspiracy is alleged to have started "as early as June 2001" and continued "at least through June 2006." See id. at ¶¶ 24, 43. The acts underlying the Count Two wire fraud and Count Four mail fraud charges are both alleged to have occurred on May 5, 2005. See id. at ¶¶ 36-37, 51-52; but see United States v. Camacho, 939 F. Supp. 203, 209 (S.D.N.Y. 1996) ("[T]emporal and spatial relationships are not sufficient by themselves to establish the linkage necessary to justify joinder.").
The similarities between the two conspiracies are not enough, however, to satisfy the requirements of joinder under Rule 8(b). See Ohle, 678 F. Supp. 2d at 227 (granting severance where the similarities between the two alleged conspiracies were "marginal"); United States v. Kouzmine, 921 F.Supp. 1131, 1133 (S.D.N.Y. 1996) (granting severance where both conspiracies alleged were not part of single overarching scheme and where the government only alleged that there were two participants and a victim in common); United States v. Lech, 161 F.R.D. 255, 257 (S.D.N.Y. 1995) (granting severance to defendant who had no involvement in, and at most "cursory knowledge" of, other criminal activities); United States v. Giraldo, 859 F.Supp. 52, 54 (E.D.N.Y. 1994) (granting severance where only one defendant was charged in both conspiracies); United States v. Gentile, 60 F.R.D. 686, 688 (E.D.N.Y. 1973) (granting severance even though two common participants existed among three separate offenses).
Here, the Asbestos/Construction and HVAC conspiracies each allege that Saglimbeni and Figueroa used their positions within the New York Presbyterian Hospital system to award work contracts for personal gain. See Superseding Indictment ¶¶ 20-24, 43-47. Beyond this, however, the facts and participants of the two conspiracies share no other similarities. The Asbestos/Construction Conspiracy includes all of the individual and corporate Defendants in this matter, as well as an extensive group of co-conspirator individuals and corporations. See id. ¶¶ 2-11. Alternatively, the only entities implicated by the HVAC Conspiracy are Saglimbeni, Figueroa, and one co-conspirator who, significantly, was not alleged to have been involved in the Asbestos/Construction Conspiracy. See id. ¶¶ 45-48. Equally important is the fact that Buchnik and the Yaron Defendants, both seeking severance here, are not even mentioned in relation to the HVAC Conspiracy. See id. ¶¶ 38-52. Also, the two conspiracies operated very differently. In the Abestos/Construction conspiracy, the indictment alleges that the defendants funneled kickbacks through a complex series of corporate and individual intermediaries. See id. ¶¶ 28-29.Thus, it cannot be said that "a reasonable person would easily recognize the common factual elements that permit joinder." See Feyrer, 333 F.3d at 114 (quoting Turoff, 853 F.2d at 1044).
Further, nothing in the Superseding Indictment alleges that Buchnik or the Yaron Defendants knew of or actively sought to involve themselves in the HVAC Conspiracy, which weighs heavily in favor of severance. See Gentile 60 F.R.D. at 687; Rajaratnam, 753 F.Supp.2d at 310-11 ("Counts One and Six allege no more than that [two joined defendants] sought to enrich themselves by trading on inside information. That allegation amounts to little more than that both defendants separately conspired to commit the same offense.") (internal citation omitted). see also Ohle, 678 F.Supp.2d at 225 ("Knowledge of the other conspiracy is not required, but it is an indicator of whether or not there is a common scheme or purpose."); Lech, 161 F.R.D. at 257. In Gentile, for example, the Court held that the "common thread" running through the indictment was the involvement of a common defendant, along with different defendants in each count, trying to bribe the same IRS employee. See 60 F.R.D. at 687. Beyond that, however, the Court found "nothing in the indictment which indicate[d] the defendants had acted in concert or participated in a common scheme or plan." Id. In fact, "[the defendants] had anything to do with the separate attempts to influence the determination of the other's tax liability." Id. Ultimately, the Court maintained that severance was proper. Id. at 689.
Moreover, this is not a case where severance would lead to "the evidence at one trial essentially duplicat[ing] the evidence at the other." See Feyrer, 333 F.3d at 114. Though certain evidence or testimony regarding NYPH policies and practices would likely be presented at both trials, the trials would not be duplicative, particularly given that the Government alleges different schemes and participants in each conspiracy. Thus, the Court cannot find here that "proof of one scheme is indispensable for a full understanding of the other." See Turoff, 853 F.2d at 1044; see also Rajaratnam, 753 F. Supp. 2d at 304 ("[J]oinder is improper where '[c]ommission of one of the offenses neither depended upon nor necessarily led to the commission of the other' and 'proof of the one act neither constituted nor depended upon proof of the other.'") (citation omitted).
Lastly, the Superseding Indictment fails to establish a "key link" between the Asbestos/Construction and HVAC conspiracies sufficiently indicating that "one scheme stemmed from the other" or that they were "part and parcel" of each other. See id. Despite the involvement of Saglimbeni, Figueroa and NYPH in both conspiracies, there is no allegation in the Superseding Indictment of a common plan or purpose amongst the joined defendants. See Kouzmine, 921 F.Supp. at 1133; Lech, 161 F.R.D. at 256; Gentile, 60 F.R.D. at 686. In the absence of allegations outlining a more definite connection between the separate conspiracies at issue here, the Buchnik and Yaron Defendants' pending motions to sever Counts One and Two from Counts Three and Four pursuant to Rule 8(b) are GRANTED. 2. The Saglimbeni Defendants' Motion to Sever Figueroa from Counts One , Three and Four
Without an allegation of a common plan or scheme, this case is distinguishable from others finding defendants of separate conspiracies properly joined by the existence of such common plans. See e.g., Rittweger, 524 F.3d at 178 (upholding joinder where defendants of distinct schemes shared common plan to fraudulently induce customers to invest in the same credit facility); Feyrer, 333 F.3d at 114 (finding joinder appropriate where defendants of separate conspiracies shared common plan, overlap of participants and temporal knowledge of the others' illegal activities); Attanasio, 870 F.2d at 815 (finding joinder appropriate where, in addition to overlap of participants and acts, transactions alleged in separate conspiracies shared common purpose of concealing and laundering defendant's income).
Because the Court finds severance proper pursuant to Rule 8(b), the Court does not reach Defendants' contention these Counts should also be severed pursuant to Rule 14 of the Federal Rules of Criminal Procedure.
The Saglimbeni Defendants move to sever Figueroa from Counts One, Three and Four on the grounds that out-of-court statements made by Figueroa, as a non-testifying co-defendant, would be prejudicial to Defendant's rights under the Sixth Amendment's Confrontation Clause. See Saglimbeni Mem. of Law 2-3; see also Bruton v. United States, 391 U.S. 123, 136-37 (1968) (finding limiting instructions an inadequate substitute to defendant's constitutional right of cross-examination in the face of non-testifying defendant's incriminating confession).
In Crawford v. Washington, 541 U.S. 36, 68 (2004), the Supreme Court ruled that the Sixth Amendment's Confrontation Clause bars the introduction of out-of-court testimonial statements in criminal proceedings unless the declarant was unavailable to testify and the defendant previously had the opportunity to cross-examine the witness. At issue here are statements Figueroa allegedly made to an individual that he: (1) did not know at the time to be a cooperating witness, and (2) did not know was recording their conversation. See Saglimbeni Mem. of Law 2-3; Gov. Mem. in Opp. to Sev. 28. The Second Circuit has consistently held that statements made under such conditions are not "testimonial statements" subject to exclusion under Crawford. See, e.g., United States v. Burden, 600 F.3d 204, 225 (2d Cir. 2010) (statements of confidential informant on body wire were not testimonial and defendant had no Sixth Amendment right to confrontation); United States v. Pike, 292 Fed.Appx. 108, 112 (2d Cir. 2008) (witness' statements made to fellow inmate while incarcerated were not testimonial, therefore defendant had no right to confrontation); United States v. Saget, 377 F.3d 223, 229-30 (2d Cir. 2004) ("[A] declarant's statements to a confidential informant, whose true status is unknown to the declarant, do not constitute testimony within the meaning of Crawford.").
Without ruling on the admissibility of Figueroa's statements or any other testimony the Government may introduce at trial, this Court holds that the Saglimbeni Defendants are not entitled to severance of Figueroa from Counts One, Three and Four on the grounds put forth in their motion. Accordingly, that motion is DENIED.
Conclusion
Defendants' motions to dismiss Counts One through Four of the Superseding Indictment for failure to allege a federal criminal offense are DENIED;
Defendants' motions to dismiss Count Two of the Superseding Indictment as time-barred are DENIED;
Defendants' motions to sever Counts One and Two from Counts Three and Four pursuant to Rule 8(b) are GRANTED;
The Saglimbeni Defendants' motion to sever Figueroa from Counts One, Three and Four is DENIED. Dated: July 18, 2011
New York, New York
SO ORDERED:
/s/_________
GEORGE B. DANIELS
United States District Judge