762 F.3d 403 (4th Cir. 2014), 13-4378, United States v. Modanlo
|Docket Nº:||13-4378, 13-4414|
|Citation:||762 F.3d 403|
|Opinion Judge:||KING, Circuit Judge:|
|Party Name:||UNITED STATES OF AMERICA, Plaintiff - Appellee, v. NADER MODANLO, a/k/a Nader Modanlou, a/k/a Nader Modanlu, Defendant - Appellant|
|Attorney:||Samuel Everett Dewey, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellant. Sujit Raman, OFFICE OF THE UNITED STATES ATTORNEY, Greenbelt, Maryland, for Appellee. James P. Wyda, Paresh S. Patel, OFFICE OF THE FEDERAL PUBLIC DEFENDER DISTRICT OF MARYLAND, Greenbelt, Maryland; David P. Burns...|
|Judge Panel:||Before KING and THACKER, Circuit Judges, and DAVIS, Senior Circuit Judge. Judge King wrote the opinion, in which Judge Thacker and Senior Judge Davis joined.|
|Case Date:||August 07, 2014|
|Court:||United States Courts of Appeals, Court of Appeals for the Fourth Circuit|
Argued: May 13, 2014.
Appeals from the United States District Court for the District of Maryland, at Greenbelt. (8:10-cr-00295-PJM-1). Peter J. Messitte, Senior District Judge.
No. 13-4378 DISMISSED. No. 13-4414 DISMISSED.
We are required to decide whether a criminal defendant can, by less than extraordinary means, divest the district court of jurisdiction in the middle of his trial and command that the ongoing proceedings be suspended. Twenty days after his trial had begun, before the prosecution had finished presenting its evidence, Nader Modanlo filed a notice of appeal of the court's written order denying his motion to dismiss one of the eleven charges against him as barred by collateral estoppel. Sixteen days later, on the eve of jury deliberations, Modanlo filed a second notice of appeal challenging the court's denial of his motion to sever that same charge from the remainder of the trial. As explained herein, because neither notice was effective to confer appellate jurisdiction over the merits of the underlying rulings, we dismiss them both.
Modanlo, a naturalized American citizen, was born in Iran and educated in the United States. By its operative Third Superseding Indictment of February 20, 2013 (the " Indictment" ), the grand jury in the District of Maryland accused Modanlo of facilitating the 2005 launch and subsequent maintenance of an Iranian communications satellite by a state-owned Russian conglomerate, in violation of the Iran Trade Embargo. According to the Indictment, the Iranians availed themselves of Modanlo's business contacts with the Russians, as a result of which about $10 million in cash made its way in 2002 from Iran to Modanlo's closely held business entity, New York Satellite Industries, LLC (" NYSI" ). The cash hoard was funneled through Prospect Telecom, a Swiss entity established and
funded by the Iranians, with straw ownership.
The first ten counts of the eleven-count Indictment charged Modanlo with conspiring to illegally avoid the trade embargo, with three substantive violations thereof, with money laundering in connection with the initial transfer of funds from Prospect Telecom to NYSI, and with five instances of engaging in monetary transactions in excess of $10,000 with criminally derived property. The latter five charges stemmed from retransfers of the laundered funds to numbered accounts at two Russian banks and, on three occasions, to a domestic account in the name of Final Analysis Communications Services (" FACS" ), a subsidiary of Final Analysis, Inc. (" FAI" ).
Modanlo, with Michael Ahan, had formed FAI in Maryland in 1992. In September 2001, FAI's creditors placed it in involuntary Chapter 7 bankruptcy. Ahan later sued Modanlo over the conduct of their joint business affairs and obtained a judgment of $109 million, prompting Modanlo to file for personal Chapter 11 reorganization in July 2005. As is typical in a proceeding under Chapter 11, Modanlo retained possession of the bankruptcy estate and administered it himself. Meanwhile, as part of the Chapter 7 liquidation of FAI, NYSI had purchased the controlling stock in FACS. That stock increased in value after FACS, embroiled in separate litigation in the district court, was the beneficiary of a jury verdict in September 2005 amounting to nearly $160 million.
On October 14, 2005, Prospect Telecom brought a replevin action in Maryland against NYSI, seeking possession of the FACS stock. Therein, it was alleged that NYSI was in default of its $10 million " loan," in consideration of which the FACS stock had been pledged as collateral. NYSI chose not to appear to defend the allegations, and Modanlo thereafter signed its stock certificates over to Prospect Telecom. The stock transfer came to light a few weeks later, during a hearing on Ahan's motion in the bankruptcy proceeding to appoint a trustee for the Chapter 11 estate.1 That motion was granted, and, upon appointment, the trustee filed a petition to also place NYSI into Chapter 11 reorganization; the Modanlo and NYSI bankruptcies were subsequently consolidated and jointly administered.
As it turned out, the verdict in favor of FACS provided no boon to either NYSI or Prospect Telecom, as the jury's award was reduced post-trial by the district court and then eliminated entirely on appeal, leaving intact an $8 million judgment against FACS on a pair of counterclaims. See Final Analysis Comm'n Servs., Inc. v. Gen. Dynamics Corp., 253 F.App'x 307 (4th Cir. 2007) (unpublished). After the FACS stock proved to be essentially worthless, Modanlo moved to voluntarily dismiss the joint proceedings. The bankruptcy court granted the motion over the objections of the Chapter 11 trustee and the United States Trustee, both of whom complained that Modanlo's tactics had complicated the search for assets and otherwise hindered the efficient administration of the reorganization process.
Modanlo testified several times in connection with the bankruptcy proceedings. On certain of those occasions, Modanlo insisted that he had negotiated an arms-length loan agreement with Prospect Telecom and denied intimate knowledge of that company's formation or operations, denied
any awareness of the identity or nationality of its beneficial owners, and denied that he had received the $10 million in payment for his services. Modanlo's denials under oath served as the basis of Count Eleven of the Indictment, which charged him with obstructing, influencing, or impeding the bankruptcies (the " obstruction charge" ).
More than eight months prior to the beginning of his criminal trial, on August 14, 2012, Modanlo moved to dismiss the obstruction charge as barred by collateral estoppel.2 Modanlo updated his motion on November 21, 2012, with additional materials and argument, to which the government responded in kind. The gist of the motion was that the dismissal of the joint bankruptcy proceedings, granted notwithstanding the active opposition of the United States Trustee, constituted a prior adjudication of the obstruction charge disfavoring the prosecution and binding the government's agents. Modanlo asserted that he had thereby been rendered immune from being federally prosecuted for the same conduct, and the United States Attorney was thus precluded from pursuing Count Eleven.
On January 10, 2013, the district court conducted a hearing on the dismissal motion. At the conclusion of the hearing, the court announced from the bench:
All right. The court is going to deny the motion. I'm going to file a written opinion. Just go ahead on the assumption that the motion is denied. I don't know how quickly we'll get the opinion out. This is an important issue. It's worth writing about, but it's going to take some time. I just wanted to declare what my holding is...
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