Opinion
Criminal No. 3:04-CR-289-H.
May 6, 2005
MEMORANDUM OPINION AND ORDER
Before the Court are Defendant Aamir Sattani's ("Sattani") Motion for a New Trial, filed March 15, 2005; Defendant James DeMik's ("DeMik") Motion for New Trial, filed March 11, 2005; DeMik's Motion for New Trial, filed March 15, 2005; DeMik's Supplement to Motion for New Trial, filed March 28, 2005; and the Government's Response, filed April 14, 2005. For the following reasons, Sattani's Motion is DENIED and DeMik's Motions are DENIED.
DeMik's Supplement was filed after the deadline for filing post-conviction motions had elapsed under Federal Rule of Civil Procedure 33.
In the interest of economy, the Court considers DeMik's Motion for New Trial in conjunction with Sattani's Motion for New Trial where the arguments presented are the same.
A Motion for New Trial should be denied where "[t]he evidence [is] sufficient to support the jury's verdict if a rational jury could have found the essential elements of the crime beyond a reasonable doubt." United States v. Doke, 171 F.3d 240, 242 (5th Cir. 1999). Such motions are disfavored and should be granted only in exceptional circumstances. United States v. Scroggins, 379 F.3d 233, 239 (5th Cir. 2004); United States v. O'Keefe, 128 F.3d 885, 898 (5th Cir. 1997). A defendant moving for a new trial bears the burden of demonstrating that prejudice affecting substantial rights occurred. See United States v. Cooks, 52 F.3d 101, 103 (5th Cir. 1995). This burden is not met by conclusory allegations or speculation. See United States v. Munoz, 150 F.3d 401, 413 (5th Cir. 1998) (internal citations omitted); United States v. Welch, 656 F.2d 1039, 1054 (5th Cir. Unit A 1981) (denying motion for new trial because conclusory contention did not satisfy defendants' burden of demonstrating clear prejudice); see also United States v. Navarro, 737 F.2d 625, 631 (7th Cir. 1984), cert. denied, 469 U.S. 1020.
I. Sattani's Motion for New Trial
Sattani raises nineteen arguments in favor of his Motion for a New Trial. These arguments fall neatly into four different general categories: (1) denial of the right to present a defense and evidence as to materiality (arguments 1-5); (2) prosecutorial misconduct (arguments 6-11); (3) concealment, failure to disclose, or inappropriate use of evidence (arguments 12-15); and (4) denials of Defendant's pre-trial and trial motions for severance (arguments 16-19). Defendant's arguments will be addressed within each of these general categories.
A. Right to Present a Defense (arguments 1-5)
Sattani argues generally that the Court refused "to allow Defendant Sattani his constitutional right to present a defense." (Sattani's Mot. at 2 (Argument 1).) Although a defendant has a constitutional right to present a defense, Washington v. Texas, 388 U.S. 14, 19 (1967), this general allegation is insufficient to assert a constitutional claim. Therefore, the Court will consider this general allegation in light of Sattani's more specific arguments.
1. Expert Witness: Cynthia Shea
Sattani argues that the Court committed error when it prevented Sattani from calling his expert witness, Cynthia Shea ("Shea"). (Sattani's Mot. at 2 (Argument 2).) Sattani argues that error was committed because the Court did not entertain an "adequate Daubert inquiry." ( Id.) The Court analyzed Sattani's offer of proof (expert report) provided under Federal Rule of Civil Procedure 103(a)(2). See Guy v. Crown Equip. Corp., 394 F.3d 320, 328 (5th Cir. 2004) (requiring a showing of the substance of the evidence sought to be admitted at the time of exclusion). The Court considered and still finds the testimony sought to relate to a legal conclusion, be irrelevant, or be duplicative of explanations of banking practices. (Transcript at 2-7.) See United States v. Riddle, 103 F.3d 423, 427 (5th Cir. 1997).
a. Legal Conclusion
The expert testimony sought offered an opinion as to the materiality of the fraudulent statements submitted to Bank United. ( See Transcript at 2-7.) Materiality is an element of bank fraud. United States v. Campbell, 64 F.3d 967, 975 (5th Cir. 1995). However, the testimony sought related to a legal conclusion and therefore is impermissible. United States v. Izydore, 167 F.3d 213, 218 (5th Cir. 1999); see Estate of Sowell v. United States, 198 F.3d 169, 171 (5th Cir. 1999) (forbidding testimony as to whether a party acted reasonably, as calling for a legal conclusion). The issue of materiality in bank fraud cases is one for the jury to decide. See United States v. Gaudin, 515 U.S. 506, 510-11 (1995); United States v. Neder, 527 U.S. 1, 25 (1999); see also United States v. McLaughlin, 386 F.3d 547, 553 (3d Cir. 2004).
The Court concludes that the testimony sought is irrelevant, since materiality does not require that a bank actually rely upon the fraudulent information. See United States v. Rashid, 383 F.3d 769, 778-79 (8th Cir. 2004); see also United States v. Swaim, 757 F.2d 1530, 1534 (5th Cir. 1985). "[A] statement could indeed be material, even though only an unreasonable person would rely on it, if the maker knew or had reason to know his victim was likely so to rely." United States v. Davis, 226 F.3d 346, 358-59 (5th Cir. 2000); see also United States v. Blocker, 104 F.3d 720, 735 (5th Cir. 1997).
The testimony sought does not negate the reasonable belief of the conspirators that the fraudulent statements, even if "suspicious," would be relied upon by Bank United. ( See, e.g., Transcript at 69, 191-92, 204, 209, 254, 257-58, 268, 299-300, 324, 326, 402, 407-08.) Similarly, the testimony sought does not negate that Bank United could not issue the loans without some documentation and therefore relied upon the presence of paper in the file, whether sufficient to adequately assess risk or not. ( See Transcript at 191-92, 254, 298, 386, 401-02, 407, 411-12, 516.). Finally, that the fraudulent submissions were "suspicious" "does not mean that [they were] not material, that is, that [they] did not have a natural tendency to influence the bank or was not capable of influencing the bank." Rashid, 383 F.3d at 778-79. Accordingly, any error committed in refusing the expert testimony, if any, would be harmless beyond a reasonable doubt, and should therefore be ignored. Chapman v. California, 386 U.S. 18, 24 (1967).
The Court also finds no prejudice to Sattani, since the expert report states that "[m]ost of loan approvals relied on unsubstantiated `gift letters' of dubious origin." (Shea Expert Report, at 7.) Although the expert concludes that such reliance is unreasonable ( id. at 8), that Bank United may have been unreasonable does not negate the materiality element of bank fraud. The report does not otherwise deny Bank United's reliance on the fraudulent gift letters. The expert's Declaration, attached as Exhibit A to Sattani's Motion, constitutes a reversal of position (as stated in the expert report) with respect to the gift letters. In the Declaration, Shea now states that she does "not believe that Bank United analyzed or put any credibility on the gift letters due to the bank's apparent failure to act on any of the [listed] . . . highly suspicious elements." (Sattani's Mot., Exh. A (Shea Declaration), at 5.) Sattani did not present to the Court Shea's Declaration until filing the instant Motion. Accordingly, the Declaration was not properly presented as Sattani's offer of proof and the exclusion of Shea's testimony based upon the substance proposed in the Declaration is not error. See Guy, 394 F.3d at 328.
Even assuming such an offer was properly made, Shea's Declaration still falls short of negating materiality. Sattani's expert indicated that she believed Bank United did not rely upon the fraudulent misstatements because the Bank's actions (1) were not in keeping with industry practice and (2) were unreasonable. ( See Sattani's Mot., Exh. A (Shea Declaration), at 5.) Neither of these conclusions negate the theory of materiality as to the conspirators' belief that the Bank would rely upon the fraudulent statements, even if unreasonable. Similarly, the expert's conclusion that Bank United officers did not follow industry practice and were perhaps complicit in the fraud does not negate the conspirators' belief that Bank United would, if unreasonably, rely upon the fraudulent statements. Finally, the Declaration does not negate the necessity of "papering the file" with the fraudulent documents before any loan could be approved, and that reliance on the existence of the paper, even if false, existed. See United States v. Blocker, 104 F.3d 720, 735 (5th Cir. 1997) ("Bank of the South relied on, among other things, White's financial statement when it approved the loan. There . . . was no argument before the district court that the financial statement, if false, was not offered to influence Bank of the South to loan $100,000. It could hardly be suggested that a financial statement of the borrower would not be material to the decision to loan such a large sum of money."). Accordingly, the Court concludes that the expert testimony sought as expressed in Shea's Declaration, even taken as true and admitted, would not refute at least one theory of materiality. Additionally, the Court finds minimal prejudice to Sattani in excluding such expert testimony, given Shea's reversal of position, other trial testimony, and the irrelevance of any complicity in the fraud by officers of Bank United. See infra.
b. Irrelevant
The Court also considers Shea's proposed testimony to be largely irrelevant under Federal Rule of Evidence 402. FED. R. EVID. 402; cf. United States v. Arney, 248 F.3d 984, 991 (10th Cir. 2001). Shea's report primarily seeks to establish willful negligence or complicity in the fraud on the part of Bank United. ( See generally Shea Expert Report.) Shea concludes that Bank United's loan processing was so unreasonable that it could not have relied upon the fraudulent statements. ( See Sattani's Mot., Exh. A (Shea Declaration), at 5.) This, however, is a non sequitur. The only evidence in the case establishes that Bank United did rely upon the fraudulent statements and that the conspirators believed Bank United would rely upon the statements. ( See, e.g., Transcript at 191-92.) No evidence is presented that Bank United did not, in fact, rely upon the fraudulent statements. See United States v. Rashid, 383 F.3d 769, 778-79 (8th Cir. 2004). Accordingly, Shea's testimony, even if allowed, would not negate materiality. Indeed, Shea acknowledges that the fraudulent documents are precisely the type that are relied upon by banks in the loan approval process. (Shea Expert Report, at 5.) Shea claims the difference is that Bank United did not verify the accuracy of gift letters or verify account balances for sufficient periods of time. ( Id.) This, however, does not negate the Government's proof that gift letters and account balances are types of information which have a tendency to influence a bank's decision in approving a loan.
c. Duplicative
To the extent that Shea's testimony would not relate to the fraud charged in the instant case, but rather to general industry practices, the Court concludes that such testimony would largely constitute duplicative explanations of banking practices and therefore within the discretion of the Court to deny under Federal Rule of Evidence 403. FED. R. EVID. 403; see Riddle, 103 F.3d at 427. Even if Shea's testimony would not be duplicative, the Court concludes that such testimony would be of little value to Sattani and therefore any error in denying such testimony would be harmless.
Accordingly, the Court concludes that Shea's testimony was properly denied. As such, the Court did not need to entertain a reliability inquiry pursuant to Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993). See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999) ("[A] trial court may consider one or more of the specific factors that Daubert mentioned when doing so will help determine that testimony's reliability."). The Court, therefore, finds no error in barring the expert testimony.
2. Fact Witness: John H. Carney
Sattani argues that the Court erred by barring testimony from John H. Carney ("Carney"), a fact witness listed by Sattani. (Sattani's Mot. at 2 (Argument 3).) Sattani's offer of proof as to Carney's testimony under Federal Rule of Civil Procedure 103(a) is Carney's unsigned Affidavit (subsequently adopted by Carney on the stand) and Carney's testimony on the stand for the purposes of providing Sattani an offer of proof. The Affidavit and statements on the stand indicate that Carney would testify that he notified Bank United regarding alleged fraudulent Small Business Administration ("SBA") loan transactions involving Sargent Hussain ("Hussain"). (Carney's Aff. at 1-2; Transcript at 555-57.) Carney would also testify to issues related to a civil case involving fraudulent loans at Bank United, including the complicity of Bank United officers in any fraudulent loan transactions. (Transcript at 552-58.) Sattani suggested in conference that Carney's testimony would go to the materiality of the fraudulent statements made by the conspirators. Like Shea's testimony, however, Carney's testimony misses the mark. Even if the officers were co-conspirators in the fraud, Sattani's criminal liability would not be excused. United States v. Saks, 964 F.2d 1514, 1518-19 (5th Cir. 1992). Carney did not offer as proof any testimony that Bank United did not, in some part, rely upon the fraudulent representations made by the conspirators. See Rashid, 383 F.3d at 778-79. Therefore, Carney's proffered testimony is irrelevant under Federal Rule of Civil Procedure 402 and does not serve to negate the Government's proof of materiality. Accordingly, the Court's exclusion of his testimony does not warrant a new trial.
Even assuming that Carney's testimony could somehow be made relevant, the Court finds that such relevance would be substantially outweighed by the confusion of the issues resulting from Carney's testimony, and therefore should still be excluded. FED. R. EVID. 403.
3. Granting Government's Motion in Limine
Sattani further argues that the Court erred in granting the Government's Motion in Limine which barred Sattani from "introducing evidence at trial that the bank was not the victim of the fraud because its officers and employees participated in or were complicit in the fraud." (Sattani's Mot. at 3 (Argument 4).) As discussed above, participation of bank officers in the conspiracy to commit bank fraud does not constitute a defense for the co-conspirators. Saks, 964 F.2d at 1518-19. Defendant avers that the Court erred by barring "other evidence tending to show that the Defendant Sattani's conduct was neither material to the transactions, nor were the Defendant Sattani's actions such that placed Bank United at risk of loss or civil liability." (Sattani's Mot. at 3-4 (Argument 4).) This argument is wholly without merit. Neither this Motion nor Sattani's Response to the Government's Motion in Limine, filed February 22, 2005, specifically identifies the evidence which would tend to exculpate Sattani and patently misstates the law. Sattani's actions need not have been material to the transactions, so long as he was involved in the conspiracy to commit bank fraud, had the requisite intent to commit bank fraud, and committed an overt act in furtherance of the conspiracy. See United States v. Dadi, 235 F.3d 945, 950 (5th Cir. 2000); United States v. Svoboda, 347 F.3d 471, 476 (2d Cir. 2003); United States v. Tilton, 610 F.2d 302, 309 (5th Cir. 1980) (A conspirator is criminally liable for the substantive offenses committed by co-conspirators which are reasonably foreseeable as necessary to further the conspiracy.).
The Court has elsewhere addressed the issue of risk of financial loss and civil liability in ruling upon Sattani's Motion for Judgment of Acquittal, and will not repeat its analysis here. ( See Mem. Op. Order, ruling on Sattani's Mot. for Judgment of Acquittal, entered May 6, 2005).
4. Deposition Testimony
Sattani argues that the Court committed error in excluding the civil depositions of Kimela Jacobs ("Jacobs") and Michael Walsh ("Walsh"), former officers of Bank United, after they invoked the Fifth Amendment privilege against self-incrimination. (Sattani's Mot. at 3 (Argument 5).) The depositions from a civil case contain no statements which would exculpate Sattani. Neither deposition excerpt contains information relevant to the instant criminal case and would confuse the issues to such an extent as to outweigh any possible relevance and therefore was properly excluded under Federal Rules of Evidence 402 and 403. Additionally, the Court finds that the depositions constitute inadmissible hearsay, since the Government was not a represented party at the deposition and therefore had no meaningful opportunity to cross-examine the witnesses. See United States v. Mann, 161 F.3d 840, 860-61 (5th Cir. 1998) (allowing deposition testimony where both parties in criminal case were represented in civil case). Therefore, the Court did not err in excluding the deposition testimony of Jacobs and Walsh.
Accordingly, Sattani's Motion for New Trial based upon denial of a constitutional right to present a defense or evidence as to materiality is DENIED.
B. Prosecutorial Misconduct (arguments 6-11)
Sattani argues generally that "[a] new trial should be granted because of prosecutorial misconduct." (Sattani's Mot. at 3 (Argument 6).) This conclusory allegation is insufficient to state a ground upon which to grant a motion for new trial. See Young v. Herring, 938 F.2d 543, 560 (5th Cir. 1991). This general allegation, therefore, will be considered along with Sattani's more specific allegations of misconduct.
Sattani argues in repeated fashion and without evidentiary foundation that the Government "threatened defense witnesses with criminal prosecution to prevent them from testifying on behalf of the Defendant." ( Id. at 3 (Arguments 7-10).) Sattani seeks an evidentiary hearing on the issue. (Sattani's Mot. at 11.) Sattani subpoenad six witnesses who asserted their Fifth Amendment privilege. (Govt's Resp. at 16.) Sattani alleges that the Government "coerc[ed] such witnesses into invoking their 5th amendment rights, even though such witnesses had voluntarily testified under oath in prior deposition proceedings." ( Id. at 3 (Argument 9).)
Sattani "bears the burden of establishing his right to a federal evidentiary hearing." Young, 938 F.2d at 559. Although an evidentiary hearing may be granted to determine the existence of prosecutorial misconduct, a hearing is not compelled by an allegation of such misconduct. United States v. MMR Corp., 954 F.2d 1040, 1046 (5th Cir. 1992). To establish such a right, the movant must do more than allege "conclusory allegations unsupported by specifics" or "contentions that in the face of the record are wholly incredible." Young, 938 F.2d at 560 (internal quotations omitted).
Sattani merely states that "all subpoenad borrowers appeared, were sworn in by the Court, and then all those that appeared invoked their Fifth Amendment rights." (Sattani's Mot. at 11.) Sattani provides no evidence that the prosecutors spoke with Jacobs or Walsh. The record indicates that the Government spoke with counsel for Jacobs and Walsh. (Transcript at 463.) Even if the Government did communicate to Jacobs and Walsh via counsel about the implications of their testimony, this would not establish a constitutional violation since the Government may inform potential defense witnesses that they are targets of investigation. See, e.g., United States v. Morrison, 535 F.2d 223, 228 (3d Cir. 1976); United States v. Whittington, 783 F.2d 1210, 1219-20 (5th Cir. 1986); United States v. Frick, 684 F.2d 1126, 1130 (5th Cir. 1982).
That four witnesses were placed on the witness lists of both Sattani and the Government does not establish impropriety or an inference thereof. Three of the four individuals identified in Sattani's Motion were served with subpoenas by the Government. The other individual, Sattani's mother, was not served with a subpoena because the Government was unable to locate her.
The Court finds no reasonable basis to grant Sattani's motion for a hearing. Counsel for Jacobs and Walsh, in representing his clients as they invoked the Fifth Amendment, stated that they invoked the Fifth Amendment upon becoming aware that the Government's investigation against Jacobs and Walsh was still ongoing. (Transcript at 463; see id. at 451, 458-62.) Accordingly, no due process violation exists, since "the investigation of witnesses [was] not prompted by the possibility of the witnesses testifying." United States v. Dupre, 117 F.3d 810, 823 (5th Cir. 1997) (emphasis added). Additionally, the communication regarding the possible implications of testifying was relayed to counsel for Jacobs and Walsh and not to them directly. Without more, threats to an adversary's counsel do not rise to the level of a constitutional violation. See United States v. Thompson, 130 F.3d 676, 686-87 (5th Cir. 1997).
Sattani argues that Jacobs and Walsh were never "interviewed by the FBI, the SBA or the Office of the Inspector General regarding their connected activities between Hussain and Bank United in the SBA preferred lender loan program." (Sattani's Mot. at 11 n. 7.) This issue, however, is wholly irrelevant to prosecutorial misconduct.
As to Sattani's other witnesses who Sattani alleges were intimidated into silence by the Government, Sattani provides no factual basis for such allegations or even a statement that Sattani would have, in fact, called those witnesses. Sattani's allegations of prosecutorial misconduct are therefore based upon mere speculation and conclusory allegations without evidentiary support of any kind. The Court considers this insufficient to justify an evidentiary hearing.
Sattani correctly states that the Government did obtain use immunity orders for two borrowers, Ferozali Karamali ("Karamali") and Mukesh Chawala ("Chawala"). Sattani listed Chawala as a probable fact witness and Karamali as a possible fact witness. The Government did not call these two witnesses. Sattani claims this precluded Sattani from cross-examining those witnesses. (Sattani's Mot. at 11 n. 6.) However, these witnesses were on Sattani's witness list and could have been called for direct examination by Sattani. (Govt's Resp. at 16.) Cf. United States v. Mullins, 22 F.3d 1365, 1372 (6th Cir. 1994) (noting that Defendant would have sought to compel testimony had Defendant known of the Government's promise to grant use immunity). Additionally, "[t]here was no prejudice to [Defendant] when the government elected not to call witnesses that it might have previously called." See United States v. Roca-Suarez, 30 Fed. Appx. 723, 725 (9th Cir. 2002); see also Mullins, 22 F.3d at 1372.
Further, Sattani does not establish that if the Government did improperly threaten defense witnesses, Sattani was prejudiced. "The defendant bears the burden of showing that testimony would have been different but for the government's actions." United States v. Thompson, 130 F.3d 676, 687 (5th Cir. 1997). Sattani has made no showing that he would have called the allegedly threatened witnesses to testify, other than Jacobs and Walsh. As to the testimony sought from Jacobs and Walsh, the Court finds that the testimony would have been largely, if not wholly, inadmissible as irrelevant and confusing under Federal Rules of Evidence 402 and 403, as discussed supra in relation to their deposition testimony. ( See supra Part I.A.4.)
3. Closing Statement
The Government, during closing statements, noted that Sattani could have served a subpoena on any Bank United officer it wished and asked the jury to determine the significance of that. (Transcript at 690.) Sattani argues that this constitutes prosecutorial misconduct. (Sattani's Mot. at 11 n. 7, 4 (Argument 11).) Although Sattani is correct that such statements can be improper, see United States v. Virgen-Moreno, 265 F.3d 276, 291 (5th Cir. 2001); United States v. Iredia, 866 F.2d 114, 118 (5th Cir. 1989), the Government's statement was one in response to DeMik's closing argument which stated that "the government chose not to bring to you a representative of the bank to explain the bank's position in these transactions." (Transcript at 690.) The Government's response was therefore acceptable. See Virgen-Moreno, 265 F.3d at 291-92 (5th Cir. 2001); United States v. Bustamante, 45 F.3d 933, 945 (5th Cir. 1995). Furthermore, the Court sustained the Government's objection to DeMik's statement and counseled the jury to disregard the statements. (Transcript at 690.) The Court considers this to be sufficient to negate any prejudice, if any, which may have been caused by the statement of the prosecution. Accordingly, Sattani's Motion for a New Trial is DENIED as to Sattani's claims of prosecutorial misconduct.
C. Evidentiary Issues (arguments 12-15)
Sattani raises a number of arguments for a new trial based upon evidentiary issues. Each argument is addressed in turn.
1. Use of Perjured Testimony and Other False Evidence
Sattani alleges that the Government used perjured and other false evidence, known by the Government to be false, and failed to correct such falsity during the course of the trial. (Sattani's Mot. at 4 (Argument 12).) Sattani, however, fails to specifically identify any evidence he believes is false or to plead scienter with any degree of specificity. Sattani does point to the testimony of Hussain, Matt Hassan ("Hassan"), and Zulfiquar Dharani. ( Id.) However, Sattani does not point to any specific statements by these witnesses which may be construed as false or that the Government knew that such statements were indeed false. Further, Sattani does not allege any prejudice (or materiality of the allegedly perjured testimony or evidence) arising from these purportedly perjured statements or evidence. DeMik makes the same generic argument as to the testimony of Hussain (DeMik's Mot. at 2 (Arguments 7, 8)), and therefore DeMik's Motion suffers from the same deficiencies as Sattani's Motion. For the reasons stated above, Sattani and DeMik failed to meet their burden to demonstrate that a new trial or even an evidentiary hearing on the issue of whether the Government knowingly used perjured testimony or false evidence is warranted. See Hill v. Johnson, 210 F.3d 481, 488 (5th Cir. 2000) (internal citation omitted); see also Pyles v. Johnson, 136 F.3d 986, 997-98 (5th Cir. 1998).
DeMik also raises this issue on the grounds that perjured testimony should have been stricken where documents entered on the record as to DeMik's profit and motivation were the best evidence. (DeMik's Mot. at 3 (Argument 15).) DeMik failed to make such an objection at the time of trial and fails now to identify to which exhibits and testimony he refers. The Court, however, concludes that testimony on the issue was useful to (1) prove DeMik's requisite intent and knowledge under the bank fraud and money laundering statutes and (2) explain the exhibits. The Court DENIES DeMik's Motion as to this argument.
2. Concealment of Exculpatory or Impeachment Evidence
Sattani argues that the Government violated Brady v. Maryland, 373 U.S. 83, 87 (1963), and its progeny, by concealing evidence exculpatory to Sattani or which may impeach Government witnesses. (Sattani's Mot. at 4 (Arguments 13 and 14).) Again, Sattani does not identify the specific evidence withheld. Sattani has made the Court aware of his belief that the Government improperly withheld Federal Bureau of Investigation ("FBI") Form 302 investigation reports ("302 Forms") related to interviews with Hassan and Hussain. (Sattani's Specific Mot. to Compel Disclosure of Brady/Giglio Material, filed Feb. 22, 2005, at 4.)
Sattani also argues that the Court erred in not compelling the Government to "turn over to the defense Brady and Giglio [ v. United States, 405 U.S. 150 (1972)] information." (Sattani's Mot. at 4 (Argument 15).) Sattani does not identify any such information, nor is the Court aware of any. Sattani filed a Specific Motion to Compel Disclosure of Brady/Giglio Material on February 22, 2005. The Court has addressed this Motion elsewhere and denied it on February 23, 2005, based upon arguments made in conference. Although Sattani filed a letter request for discovery from the Government on January 18, 2005, Sattani did not seek a Court Order compelling such discovery apart from the aforementioned Motion. Even if Sattani's letter could be construed as seeking a Court Order, the Court concludes that Sattani has not met his burden to establish a Brady or Giglio violation. Absent a specific allegation of suppressed evidence, the Court finds that no material evidence was suppressed so that no Brady or Giglio violation would ensue and that the Court's "refusal" to issue an order compelling discovery does not constitute error since such an order would have "served no purpose." See United States v. Runyan, 290 F.3d 223, 245 (5th Cir. 2002).
The Court summarily dismisses Sattani's claim that the Government withheld other exculpatory evidence.
Since the 302 Forms detailing the interview with Hassan and Hussein are not signed by the witnesses and do not contain verbatim statements by the witnesses, Sattani has no right to the Forms under the Jencks Act, but only to the contents thereof, when such contents constitute material impeachment or exculpatory evidence as defined by Giglio and Brady and their progeny. See United States v. Williams, 998 F.2d 258, 269 (5th Cir. 1993). The Court has reviewed these reports in their entirety, which were provided to the Court for in camera review. Having reviewed the reports, the Court finds that the portions of the reports which might be used to impeach the witnesses or exculpate Sattani were properly disclosed under Brady/Giglio by the Government prior to trial. See Pyles v. Johnson, 136 F.3d 986, 998-99 (5th Cir. 1998); see also Johnson v. Dretke, 394 F.3d 332, 336 (5th Cir. 2004); United States v. Walters, 351 F.3d 159, 169 (5th Cir. 2003) (citing Lawrence v. Lensing, 42 F.3d 255, 257 (5th Cir. 1994)). The Court concludes that the Government had no obligation to disclose any more of the content of the 302 Forms than was disclosed. See United States v. Killian, 639 F.2d 206, 210-11 (5th Cir. 1981) (noting also that disclosure of irrelevant material is improper where it may jeopardize other investigations). Accordingly, Sattani's Motion for New Trial based upon evidentiary disputes is DENIED.
DeMik alleges a similar constitutional violation. (DeMik's Mot. at 3 (Argument 12).) For the same reasons above, DeMik's Motion is DENIED as to any constitutional violation or right to new trial arising from evidentiary disputes.
D. Denial of Severance (arguments 16-19)
Sattani and DeMik raise a number of arguments that Sattani's motions for severance should be granted. (Sattani's Mot. at 4-5 (Arguments 16-19); DeMik's Mot. at 2 (Arguments 9-10).) Defendants' arguments are addressed in turn.
1. Pretrial Motion
Sattani and DeMik argue that "a new trial should be granted because the trial evidence supported Defendant Sattani's contention that his pre-trial motion for a severance should have been granted." (Sattani's Mot. at 4 (Argument 16); DeMik's Mot. at 2 (Argument 9).) Post hoc use of trial evidence in consideration of a pretrial motion already decided is improper. See United States v. Marbury, 732 F.2d 390, 400 n. 13 (5th Cir. 1984). As such, Sattani states no valid argument as to why a new trial must be granted based upon the Court's denial of Sattani's pretrial motion for severance.
Sattani also claims in Argument 19 that the Court's denial of Sattani's pre-trial motion was in error. Like Argument 16, this Argument is based upon actions in and evidence gleaned during trial. Therefore, it is improper to consider such post hoc trial evidence in considering the motion.
2. Trial Motion
Sattani and DeMik argue that the Court's denial of Sattani's trial motion for severance was in error and that such error requires a new trial. Sattani argues that a severance was warranted because (1) Rule 404(b) evidence was introduced against DeMik which caused a prejudicial spillover, injuring Sattani, and (2) the prosecution engaged in "impermissible cross-examination" of DeMik regarding his involvement with other individuals of allegedly Pakistani descent who were under investigation by the FBI. (Sattani's Mot. at 4-5 (Arguments 17 and 19).) Sattani argues that this cross-examination creates a danger of unfair prejudice against Sattani, since he is of Pakistani descent. (Transcript at 524.) The Court, having reviewed again the cross-examination to which Sattani objects, concludes again that the cross-examination was not improper and was not designed to elicit biases agains Pakistanis or Sattani. (Transcript at 516-22.) The Court further provided a limiting instruction to the jury as to Sattani. (Transcript at 523.) Such limiting instructions generally cure any prejudice which might otherwise be suffered by joint defendants from spillover effects. See United States v. Latrasse, 204 F.3d 177, 194 (5th Cir. 2000). Similarly, the Court concludes that the other Rule 404(b) evidence presented did not create a spillover effect so inimical to Sattani's penal interests as to justify a severance in the middle of trial or overcome the preference for joint trials in conspiracy cases. See United States v. Tarango, 396 F.3d 666, 672 (5th Cir. 2005) (noting the Fifth Circuit's preference for joint trials in conspiracy cases). The Court further relies upon its reasoning in its Order, entered February 8, 2005, denying Sattani's pretrial Motion for Severance, filed January 27, 2005. Accordingly, Sattani's Motion for New Trial based upon the Court's denial of Sattani's motions to sever is DENIED.
DeMik argues that the "presentation of massive amounts of evidence beyond the purview of Defendant DeMik and/or the submission of named persons unknown to Defendant DeMik" warranted severance. (DeMik's Mot. at 2 (Argument 10).) This argument of spillover was addressed in the Court's Order, entered February 8, 2005, denying Sattani's pretrial Motion for Severance, filed January 27, 2005. The Court applies the same reasoning from that Motion to DeMik's argument, concluding that the Court's determination not to sever the trial did not result in a violation of DeMik's constitutional right to a fair trial nor does it warrant a new trial.
III. DeMik's New Trial Motions
A. 404(b) Evidence
DeMik's Motion, filed March 11, 2005, presents one issue for the Court's consideration: whether error was committed in admitting Government's Exhibits 77a and 78a under Federal Rule of Evidence 404(b). DeMik argues that the Government admitted its mistake as to the identity of the settlement agent in the transaction. (DeMik's Mot. at 1-2.) DeMik's testimony on redirect was that he was not the closing escrow agent in the deal referenced in Government's Exhibit 77a. (Transcript at 527-28.)
The Court asked the parties to "review the exhibits and be sure only the appropriate exhibits are sent in and certify on the record to the clerk" which appropriate exhibits are to be considered by the jury. (Transcript at 715.) DeMik made no objection to inclusion of Government Exhibits 77a or 78a at that time. Similarly, DeMik made no objection to their admission during the pretrial conference when they were admitted. DeMik's testimony on redirect, although indicating the potential irrelevance of Government's Exhibit 77a, does not negate the relevance of Government's Exhibit 78a as Rule 404(b) evidence. As to Exhibit 77a, the jury was presented with conflicting testimony. ( See Transcript at 317-27, 343, 344-45, 346-47.) Given this conflicting testimony, the Court will not substitute its judgment for the jury's. In any event, the Court finds the prejudice suffered by DeMik in admitting Government's Exhibits 77a and 78a and presenting those exhibits to the jury to be negligible and to not warrant a new trial where substantial evidence exists supporting the jury's verdict and findings regarding DeMik's intent to commit the crimes charged independent of the disputed 404(b) evidence. The Court is of the opinion that striking such evidence from the record would not have affected the outcome of the case and therefore any error committed, if any, was harmless. Accordingly, DeMik's Motion for New Trial based upon the admission of Exhibits 77a and 78a is DENIED.
B. Ineffective Assistance of Counsel
DeMik alleges ineffective assistance of counsel because DeMik alleges that his counsel (1) "refused direct [client] instructions with respect to critical motions and final argument," and (2) failed to make numerous motions or objections. (DeMik's Mot. at 3 (Argument 14).) To prove ineffective assistance of counsel, DeMik must demonstrate both that counsel was deficient and that he was prejudiced as a result of that deficiency. Strickland v. Washington, 466 U.S. 668, 687 (1984); Bigby v. Dretke, 402 F.3d 551, 574 (5th Cir. 2005). DeMik's Motion lacks any specificity as to what instructions he provided to counsel and how those instructions were material to the outcome of the case against DeMik. Although DeMik did not file as many motions or objections as did Sattani, there was also less evidence presented as to DeMik's culpability. The Court accords "substantial deference to counsel's performance, applying the strong presumption that counsel performed adequately and exercised reasonable professional judgment." Titsworth v. Dretke, 401 F.3d 301, 310 (5th Cir. 2005). Although DeMik's counsel was significantly less vociferous than Sattani's counsel, the Court concludes that DeMik's overall representation on behalf of DeMik was adequate. Additionally, the Court fails to see what prejudice arose from DeMik's representation. DeMik suggests that calling character or other witnesses would have been beneficial (DeMik's Supp. to Mot. for New Trial, filed Mar. 28, 2005), yet DeMik does not indicate how such testimony would have altered the outcome of the case. The Court fails to see "that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Strickland, 466 U.S. at 694. Accordingly, DeMik's Motion for New Trial based on ineffective assistance of counsel is DENIED. See Miller v. Johnson, 200 F.3d 274, 282 (5th Cir. 2000) ("[C]onclusory allegations are insufficient to raise cognizable claims of ineffective assistance of counsel.").
C. Other Grounds
1. Bias
DeMik argues that the Court erred by conducting the trial in a partial manner, "in view of the proceedings as a whole." (DeMik's Mot. at 1 (Argument 1).) This argument is purely conclusory and will be addressed as it pertains to DeMik's more specific allegations. DeMik argues that the Court showed partiality by (1) "injecting an objection in favor of the government sua sponte while allowing the prosecution to conduct questioning of a purely racial, ethnic, religious and/place of origin nature" devoid of probative value ( id. (Argument 2)) and designed to inflame the jury's bias against DeMik ( id. (Argument 3)), and (2) failing to "admonish the prosecution against `threatening' Defendant DeMik as to his prospective answer to a preceding question." ( Id. (Argument 4)).
Having analyzed the prosecution's cross-examination of DeMik supra, the Court concludes that the cross-examination of DeMik did not cause DeMik to suffer prejudice and was not improper. DeMik misinterprets the Court's right to comment on evidence presented ( see Transcript at 187, 541), as an objection in favor of the Government. ( Id. (Arguments 2, 3).) The Court has a right to comment upon evidence to the jury when those comments are accompanied by an instruction that the jury may feel free to disregard the comments. See United States v. Hernandez-Guevara, 162 F.3d 863, 876 (5th Cir. 1998); United States v. Weeks, 919 F.2d 248, 252 (5th Cir. 1990). The Court provided such an instruction. (Transcript at 541; Jury Charge at 3-4.) Accordingly, no error was committed by the Court's comment on the evidence. Finally, the Court has been pointed to no instance where DeMik was threatened to answer a question and upon its independent review of the transcript, finds no such occurrence. Accordingly, DeMik's Motion for New Trial based upon judicial bias is DENIED.
DeMik did not object to either of the Court's two comments. (Transcript at 187, 541.) The Court did sustain its own objection to patently leading questions. (Transcript at 647.) DeMik has not and cannot establish prejudice from this ruling since the question could have been rephrased to the satisfaction of the Court.
2. Evidentiary Issues
DeMik raises two evidentiary issues which he argues warrants a new trial: that (1) DeMik was not sufficiently made aware of the Government's intent and purpose in using certain pieces of evidence (DeMik's Mot. at 2 (Argument 5)), and (2) newly discovered evidence was concealed so as to prevent DeMik from impeaching Hussain's testimony as perjured testimony. ( Id. at 2, 3 (Arguments 6, 17).) DeMik fails to point to the specific evidence in question in any of these arguments, leaving blank spaces for exhibit numbers in a boiler plate generic motion. Additionally, DeMik fails to establish, let alone argue, that evidence not disclosed would have been exculpatory. DeMik's motion is insufficient to establish any constitutional injury or right to a new trial based upon evidentiary issues.
3. Indictment Error
DeMik argues that any portions in the Indictment indicating that DeMik violated SBA instructions were negated by trial testimony. (DeMik's Mot. at 2-3 (Argument 11).) DeMik, argues that the Government knew prior to trial of the falsity of the Indictment. Therefore, presumably, DeMik believes that the Government should have stricken that part of the Indictment or not submitted it to the jury for consideration and that in doing so, prejudicial error was committed. However, DeMik fails to allege with any specificity (1) what portions of the Indictment actually stated or inferred a violation of SBA instructions, (2) what testimony actually established that DeMik did not violate SBA instructions, or (3) that a violation of SBA instructions is an element of the bank fraud or money laundering counts for which DeMik was charged. The Court concludes that DeMik has established no prejudice in the Indictment. Accordingly, DeMik's Motion for New Trial based on the inclusion of alleged violations of SBA Indictment is DENIED.
The Indictment references SBA only insofar as it alleges that the conspirators submitted "false and fraudulent documents to Bank United to secure SBA-Guaranteed loans." (Indictment at 1, 3, 4, 13.) The testimony of Angela Best ("Best"), a loan officer for the SBA, does not negate any violation of SBA instructions. Best's testimony indicates that Bank United, as a preferred SBA lender, establishes its own procedures for approving SBA loans which are effectively SBA requirements. (Transcript at 51-52, 55, 57.) Additionally, the SBA requires that an equity injection be provided by the borrower. ( Id. at 46.) Best testified that if no equity injection is provided, "[t]he loan should not close." ( Id. at 47.) Finally, the Court fails to see how the Indictment alleged a violation of SBA instructions when it fails to mention those instructions or that even if Best's testimony did negate such a violation, how that would prove exculpatory for DeMik, since the Government need not prove such a violation to find DeMik guilty of the bank fraud or money laundering charges.
4. Intent
DeMik argues that the Government failed to prove intent to commit bank fraud. (DeMik's Mot. at 3 (Argument 13).) Giving deference to the jury's findings, the Court is of the opinion that sufficient evidence exists to allow a reasonable juror to conclude that DeMik possessed the requisite intent to commit the charged offenses. ( See Transcript at 387-89.) See Scroggins, 379 F.3d at 239; O'Keefe, 128 F.3d at 898.
5. Materiality
DeMik's remaining arguments are without merit and warrant no significant discussion from the Court. DeMik alleges that the Court's instructions to the jury were deficient for failure to address the issue of "materiality." (DeMik's Mot. at 3 (Argument 16).) DeMik is mistaken. The jury charge includes materiality as an element of bank fraud and defines materiality. (Jury Charge at 9, 13.) DeMik did not object to the Jury Charge. ( See Transcript at 655-56, 657.) DeMik also argues that it was error to exclude evidence as to the alleged complicity of Bank United officers in the fraud. (DeMik's Mot. at 3 (Argument 16).) The Court finds this argument to be without legal merit, for the reasons stated in its Memorandum Opinion and Order, entered May 6, 2005, ruling upon Sattani's Motion for a Judgment of Acquittal, filed March 15, 2005. The Court concludes that sufficient record evidence exists for a reasonable juror to conclude that the actions of DeMik and the conspirators were material to the bank fraud.
IV. Conclusion
For the foregoing reasons, Defendant Sattani's Motion for New Trial is DENIED and Defendant DeMik's Motions for New Trial are DENIED.
SO ORDERED.