U.S. v. Corbin
| Decision Date | 21 October 2010 |
| Docket Number | No. 09 Cr. 0463(VM),09 Cr. 0463(VM) |
| Citation | 729 F.Supp.2d 607 |
| Parties | UNITED STATES of America, v. Daniel A. CORBIN, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Joan M. Loughnane, Reed Michael Brodsky, U.S. Attorney's Office, New York, NY, for Plaintiff.
DECISION AND ORDER
In this action, the Government charged Daniel Corbin ("Corbin") with one count of conspiracy to commit securities fraud and six substantive counts of securities fraud for illicitly trading on material, nonpublic information. Corbin has filed a motion to dismiss the charges pursuant to rules 12(b)(2) ( "Rule 12(b)(2)") and 12(b)(3)(B) ("Rule 12(b)(3)(B)") of the Federal Rules of Criminal Procedure. For the reasons detailed below, Corbin's motion is DENIED.
The securities fraud, and conspiracy to commit securities fraud, alleged in the Indictment centers around Corbin's alleged criminal trading based on material, nonpublic information that he and co-conspirator Jamil Bouchareb ("Bouchareb") received from Matthew Devlin ("Devlin"). Corbin and Bouchareb were securities day traders who worked together in Miami Beach, Florida. Devlin was employed as a sales representative in a multinational investment bank and broker-dealer located in New York, New York. The Government alleges that, from early 2005 through September 2008, Corbin and Bouchareb obtained material, nonpublic information from Devlin about numerous impending acquisitions of publicly-traded companies (the "Information") and used it to illicitly execute trades. The Government further asserts that Devlin procured the Information in violation of duties of trust and confidence to his wife ("Devlin's Wife"), and that Corbin was aware both that the Information was confidential and that Devlin breached these duties in using it to tip Corbin and Bouchareb.
Devlin had an intimate source for material, nonpublic information on imminent public market transactions. Devlin's Wife worked for an international communications firm (the "Communications Firm") that provided services to companies in connectionwith their mergers, acquisitions, and similar transactions. In the course of her work, Devlin's Wife became familiar with the Information.
Corbin and Bouchareb referred to Devlin's Wife as the "Golden Goose" because she was able to produce precious information about publicly-traded companies prior to its public announcement. In April 2005, Bouchareb sent an instant message to Devlin stating that "we need the goose to pop its head out and show us the biz." (Ind.¶ 11.) In August 2006, Corbin exchanged instant messages with Devlin during which Devlin stated "we need some goose stuff," that "none [was] out there now," and Corbin responded "ya we do." ( Id. ¶ 26(i).)
Both the Communications Firm and Devlin's Wife were aware of the Information's value and potential improper use. Thus, the Communications Firm had confidentiality policies in place, and distributed them to its employees. These policies made clear that each employee had a duty to maintain the confidentiality of nonpublic information related to the firm's clients to which they were privy.
Devlin too was well aware of the Information's value and confidentiality. Accordingly, he and his wife had a domestic confidentiality policy of sorts. "Devlin agreed [with his wife] and understood that he could not use or share any confidential information entrusted to the Communications Firm by its clients that Devlin obtained or learned from his wife." ( Id. ¶ 18.) In addition to his express agreement, the Government asserts that "Devlin and his wife had a history, pattern, and practice of sharing and maintaining confidences such that Devlin knew and reasonably should have known that his wife expected that he would maintain the confidentiality of any material nonpublic information he obtained from her." ( Id. ¶ 18.)
The Government asserts that it will seek to establish at trial that in breach of duties of trust and confidence to his wife that arose out of their express agreement and their history, pattern, and practice of sharing and maintaining business confidences in the course of their spousal relationship, from early 2005 through about September 2008, Devlin regularly misappropriated the Information from his wife and provided it to others, including Corbin and Bouchareb, so that they could engage in unlawful profitable transactions. 2 In exchange for Devin's tips, tippees Corbin and Bouchareb provided him with thousands of dollars of cash payments and gifts.
Corbin and Bouchareb, along with other alleged securities fraudsters and co-conspirators, entered into profitable securities trades prior to the public announcements of anticipated transactions using the Information, earning hundreds of thousands of dollars in unlawful profits. The Government asserts that Corbin knew that the information provided to him by Devlin was material and nonpublic, and further knew that Devlin procured it in breach of his duties to his wife. On or about September 4, 2008, during a telephone conversation between Devlin and Bouchareb, Devlin stated that "we need to make sure that we have a back story on any of these deals that I've given you from [my wife]," and Bouchareb responded "right, right, right-don't worry we're on it" and later stated "don't worry-lots of homework." ( Id. ¶ 26(y).)
On December 16, 2008, in a distinct, earlier action ( see United States v. Devlin, 08 Cr. 1307 (S.D.N.Y.), the Government charged Devlin with both securities fraud and entering into a conspiracy with Corbin and Bouchareb to commit securities fraud. The next day, the Government filed a sealed complaint against Corbin and Bouchareb, charging them with seven counts of securities fraud and one count of conspiracy to commit securities fraud. ( See United States v. Bouchareb and Corbin, 08 Mag. 2777 (S.D.N.Y).) The day after that, Devlin pled guilty to one substantive count of securities fraud and four counts of conspiracy to commit securities fraud pursuant to a cooperation plea agreement.
On May 5, 2009, Bouchareb, pursuant to a non-cooperation plea agreement, waived indictment and pled guilty to one substantive count of securities fraud and one count of conspiracy to commit securities fraud with Corbin and Devlin. ( See United States v. Jamil A. Bouchareb and Daniel A. Corbin, 09 Cr. 463 (S.D.N.Y).) Less than a month later, on June 2, 2009, Corbin waived indictment and entered a plea of not guilty to information S1 09 Cr. 463. ( Id.) On April 6, 2010, a grand jury returned the instant charges against Corbin in the form of a superseding indictment, charging him with six counts of securities fraud and one count of conspiracy to commit securities fraud. ( Id.)
Corbin seeks dismissal of the Indictment under Rule 12(b)(2) and Rule 12(b)(3)(B). Rule 12(b)(2) permits "[a] party [to] 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). Rule 12(b)(3)(B) states that a defendant must raise before trial "a motion alleging a defect in the indictment or information...." Fed.R.Crim.P. 12(b)(3)(B).
"An indictment returned by a legally constituted and unbiased grand jury ... if valid on its face, is enough to call for trial of the charge on the merits." Costello v. United States, 350 U.S. 359, 363, 76 S.Ct. 406, 100 L.Ed. 397 (1956). To be valid on its face, "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. Yannotti, 541 F.3d 112, 127 (2d Cir.2008) (quotation marks omitted); see also Hamling v. United States, 418 U.S. 87, 118, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974) ().
"[T]he sufficiency of the evidence is not appropriately addressed on a pretrial motion to dismiss an indictment." United States v. Alfonso, 143 F.3d 772, 777 (2d Cir.1998); see also United States v. Villanueva Madrid, 302 F.Supp.2d 187, 192 (S.D.N.Y.2003). Instead, "fact questions raised by an Indictment are the province of the jury...." See, e.g., United States v. Pirro, 96 F.Supp.2d 279, 283 (S.D.N.Y.1999).
The instant charges are grounded in § 10(b) of the Securities Exchange Act of1934 ("Section 10(b)" or "§ 10(b)"), 15 U.S.C. § 78j(b), and Rule 10b-5 ("Rule 10b-5"), 17 C.F.R. § 240.10b-5, promulgated pursuant that act. Section 10(b) reads:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange ... (b) To use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
15 U.S.C. § 78j(b). Pursuant to its § 10(b) rulemaking authority, the United States Securities and Exchange Commission (the "SEC") adopted Rule 10b-5, which, in relevant part, prohibits any individual or entity from "employ [ing] any device, scheme, or artifice to defraud" or ...
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