States v. Shelby
| Decision Date | 31 August 2006 |
| Docket Number | Criminal No. 11-03-93 (7). |
| Citation | 447 F.Supp.2d 750 |
| Parties | UNITED STATES of America v. Rex SHELBY. |
| Court | U.S. District Court — Southern District of Texas |
Edwin J. Tomko, McManemin & Smith, PC Dallas, TX, for Defendant.
AMENDED ORDER*
Pending before the Court is Defendant Rex Shelby's Motion to Dismiss Counts 2 and 47 Through 50 of the Fifth Superseding Indictment and Counts 2 and 7 Through 10 of the Seventh Superseding Indictment, and to Prohibit the Introduction of Certain Evidence on Grounds of Collateral Estoppel (Instrument No. 969), filed on January 24, 2006.
On March 11, 2003, the United States of America filed a multiple-count Indictment against Defendants Joseph Hirko, Kevin Howard, Scott Yeager, Rex Shelby, Michael Krautz (hereinafter "Defendants") and former Defendants Kenneth Rice and Kevin Hannon, charging them with conspiracy to commit wire fraud and securities fraud, and substantive counts of wire fraud, securities fraud, insider trading, and money laundering. The government filed a Fourth Superseding Indictment on July 22, 2004. (Instrument No. 340). On November 5, 2004, the government filed a Fifth Superseding Indictment. (Instrument No. 468). During the relevant times in the Indictment, Defendants served in various positions as executives to Enron Communications, Inc., later renamed as Enron Broadband Services ("EBS").
In the Fifth Superseding Indictment, Count One charged Defendant Shelby with conspiracy to commit securities fraud and wire fraud. (Instrument No. 468). Count Two of the Indictment charged Defendant Shelby with the substantive offense of securities fraud in connection with alleged false statements and material omissions made at a January 20, 2000 Analyst Conference. (Id). Counts Three through Six charged Defendant Shelby with the substantive offense of wire fraud in connection with press releases issued by Enron Broadband Services on January 31, 2000 through May 15, 2000. (Id.). Counts Forty-Seven through Fifty-Four charged Defendant Shelby with insider trading based on trades of Enron stock made on January 21, 2000 through July 19, 2000. (Id.). Counts One Hundred Sixty-Six through One Hundred Seventy-One charged Defendant Shelby with money laundering based on transactions on February 16, 2001 through April 7, 2002. (Id.).1
On April 18, 2005, through July 13, 2005, this Court conducted a jury trial on all of the charges pending against the Defendants. On July 20, 2005, the jury returned a verdict of not guilty against Defendant Rex Shelby on four counts of insider trading (Counts 51-54). (Instrument No. 869). The jury did not enter a verdict on the conspiracy, wire fraud, and money laundering counts, or the four additional insider trading counts (Counts 47-50). As to these counts, the jury indicated that they were hopelessly deadlocked. (Id.).
On August 12, 2005, Defendant Shelby filed a Rule 29 Motion for Judgment of Acquittal. (Instrument No. 880). On December 14, 2005, this Court entered an Order granting Defendant Shelby's Motion for Judgment of Acquittal on Counts 3-6 (Wire Fraud) and Counts 166-171 (Money Laundering). (Instrument No. 939). The Court Denied Defendant Shelby's Motion with respect to Count 1 (Conspiracy to Commit Wire and Securities Fraud); Count 2 (Securities Fraud at the January 2000 Analyst Conference); and Counts 47-50 (Insider Trading). (Id.).
On November 9, 2005, the government filed a Seventh Superseding Indictment charging Defendant Shelby with conspiracy, securities fraud, and four counts of insider trading—indicating the government's intention to retry Defendant Shelby on the conspiracy, securities fraud, and insider trading counts for which the jury failed to render a verdict. (Instrument No. 915). The Seventh Superseding Indictment removes the counts on which Defendant Shelby either received a not guilty verdict or that the Court dismissed pursuant to Rule 29. (Id.). The Seventh Superseding Indictment was based on factual allegations similar to those asserted in the Fifth Superseding Indictment. (Id.). A comparison of the counts alleged in the Fifth Superseding Indictment and the Eighth Superseding Indictment is set forth below.
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United States v. Rex Shelby
(Cr. No. 03-0093-8)
Conversion Chart for Counts Relating to Rex Shelby
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5th Superseding Indictment 8th Superseding Indictment
United States v. Hirko, et al. United States v. Rex Shelby
(Cr. No. 03-0093-5) (Cr. No. 03-0093-7)
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1
(Conspiracy to Commit Securities and
Wire Fraud) 1
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2
(Securities Fraud: 2000 Analyst Conference) 2
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3
(Wire Fraud—1/31/00 Press Release) (Jury Acquittal)
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4
(Wire Fraud—3/30/00 Press Release) (Jury Acquittal)
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5
(Wire Fraud—4/11/00 Press Release) (Jury Acquittal)
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6
(Wire Fraud—5/15/00 Press Release) (Jury Acquittal)
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47
(Insider Trading—Rex Shelby) 7
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48
(Insider Trading—Rex Shelby) 8
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49
(Insider Trading—Rex Shelby) 9
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50
(Insider Trading—Rex Shelby) 10
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51-54
(Insider Trading—Rex Shelby) (Rule 29 Acquittal)
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166-171
(Money Laundering—Rex Shelby) (Rule 29 Acquittal)
On January 24, 2006, Defendant Rex Shelby filed a Motion to Dismiss Counts 2 and 47 Through 50 of the Fifth Superseding Indictment and Counts 2 and 7 Through 10 of the Seventh Superseding Indictment, and to Prohibit the Introduction of Certain Evidence on Grounds of Collateral Estoppel. (Instrument No. 969). Under the Double Jeopardy Clause of the Fifth Amendment and Doctrine of Collateral Estoppel, Defendant Shelby argues that the crimes charged in Counts 2 (securities fraud) and 47 through 50 (insider trading) of the Fifth Superseding Indictment, and Counts 2 (securities fraud) and 7 through 10 (insider trading) of the Seventh Superseding Indictment, were effectively litigated and decided against the government in the first trial. (Instrument No. 885). Defendant Shelby does not move to Dismiss Count 1 (conspiracy to commit wire and securities fraud) of the Fifth Superseding Indictment or Seventh Superseding Indictment. (Id.).
In support of his Motion, Defendant Shelby argues that (Instrument N. 970, at 1). In addition, Defendant Shelby argues that "should the Government pursue the conspiracy count against Mr. Shelby, it cannot introduce evidence going to his knowledge or intent to commit securities fraud or wire fraud." (Id. at 22). Specifically, Defendant Shelby argues that "collateral estoppel bars the introduction of evidence going to (1) whether there was a scheme to make misrepresentations to the investing public, and (2) if so, whether Mr. Shelby participated knowingly and with the intent to defraud." (Id. at 23).
On February 13, 2006, the United States filed a Response to Defendant Shelby's Motion to Dismiss on Grounds of Collateral Estoppel. (Instrument No. 980). The government argues that "[Defendant Shelby's] reliance on generalized verdicts of acquittal on a few counts does not give rise to a conclusion that the jury or this court must have reached a decision that he did not commit the essential elements of the offenses now at issue in the Fifth and Seventh." (Id. at 3). In addition, the government argues that "the record of the trial ... fatally undermines Shelby's assertion that the jury's partial verdict acquitting him on counts 51-54 and this court's judgment of acquittal on counts 3-6 means that the jury or the court determined the essential elements relating to the counts now at issue." (Id.). The government further argues that "[e]ven if the court were to find that the jury or the court made any finding of an essential element related to counts 2 and 47-50 of the Fifth and Counts 2 and 7-10 of the Seventh, such a finding would not bar the introduction of such evidence in the trial on the Conspiracy Count contained in the Fifth and Seventh." (Id.). Finally, the government contends that Defendant Shelby's Motion to Dismiss is frivolous and requests that the Court make such a finding in this Order, and proceed with trial as scheduled. (Id.).
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U.S.A v. Shelby
...fraud. Shelby moved to dismiss the indictment on double jeopardy grounds. The district court denied the motion, United States v. Shelby, 447 F.Supp.2d 750 (S.D.Tex.2006), and we affirmed, United States v. Yeager, 521 F.3d 367 (5th Cir.2008) Yeager I), rev'd on other grounds, --- U.S. ----, ......