U.S. v. Darui

• Decision Date: 07 May 2009
• Docket Number: Criminal No. 07-149(RCL).
• Citation: 614 F.Supp.2d 25
• Parties: UNITED STATES of America v. Farzad DARUI, Defendant.
• Court: U.S. District Court — District of Columbia

614 F.Supp.2d 25

UNITED STATES of America v. Farzad DARUI, Defendant.

Criminal No. 07-149(RCL).

United States District Court, District of Columbia.

May 7, 2009.

COPYRIGHT MATERIAL OMITTED

Ronald Wesley Sharpe, Tejpal Singh Chawla, U.S. Attorney's Office, Washington, DC, for United States of America.

Joseph E. Digenova, Joseph Egidio Digenova, Victoria Toensing, Digenova & Toensing, Washington, DC, Aaron S. Book, Steven T. Webster, Webster Book LLP, Leesburg, VA, for Defendant.

MEMORANDUM OPINION

ROYCE C. LAMBERTH, Chief Judge.

The government's prosecution of defendant in May 2008 resulted in a hung jury. Before the Court are four motions by defendant: Motion [107] for a Judgment of Acquittal; Motion [114] to Dismiss Superseding Indictment as Violative of the Double Jeopardy Clause; Motion [128] to Dismiss the Indictment or Preclude at Retrial the Testimony of the Government's Principal Witness Who Obstructed Justice, Made False Statements, and Committed Perjury; and Motion [142] to Dismiss Indictment with Prejudice and for Sanction of Government for Manipulating Evidence, Submitting a False Affidavit, and Using False Testimony to Support Admission of a Material Exhibit. On February 26, 2009, the Court heard oral argument on Motion [128]. As described below, the Court finds no grounds for judgment of acquittal, dismissal of the indictment, or sanction of the government, and all four motions shall be denied.

BACKGROUND

Defendant was prosecuted and tried for five counts of mail fraud, two counts of interstate transportation of stolen property, one count of money laundering, and one count of theft. The charges were all related to defendant's alleged misappropriation of funds from the Islamic Center of Washington while he served as the Center's business manager. The government's main witness at trial was Dr. Abdullah Khouj, the Center's director and religious leader. After eleven trial days, jury deliberations began on the afternoon of Wednesday, May 21, 2008. On that Friday afternoon, the Court determined that the jury was hung and declared a mistrial.

DISCUSSION

A. Motion [107] for a Judgment of Acquittal

There are two parts to defendant's Motion [107]. The first part, which seeks acquittal on the mail fraud charges (Counts One through Five), can be disposed of quickly. Defendant contends that "[f]or the reasons asserted orally at trial, ... there was no adequate proof of mail fraud because the mails were not used in furtherance of the alleged scheme to defraud." (Def.'s Mot. [107] at 1.) As defendant seems to recognize, during trial defendant made two oral motions for dismissal based on insufficiency of the evidence, one after the government's case and one after all evidence had been submitted. The Court denied both motions. Defendant does not explain how this motion, also claiming insufficiency of the evidence, differs from the ones made during trial, nor why it should be granted while the trial motions were denied. Accordingly, the Court cannot grant defendant's motion for acquittal based on insufficiency of the evidence.

The second part of defendant's Motion [107] is more substantial. Defendant claims that the recent Supreme Court decision United States v. Santos, ___ U.S. ___, 128 S.Ct. 2020, 170 L.Ed.2d 912 (2008), "precludes prosecution of money laundering when there is no evidence the funds are profits." (Def.'s Mot. [107] at 2.) The federal money laundering statute under which defendant is charged, 18 U.S.C. § 1957, targets

"[w]hoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity...."

18 U.S.C. § 1957(a). "`Criminally derived property' means any property constituting, or derived from, proceeds obtained from a criminal offense." 18 U.S.C. § 1957(f)(2) (emphasis added). Defendant contends that Santos defines "proceeds" as "profits" rather than gross receipts. Therefore, defendant continues, because the government has not presented evidence that defendant's financial transactions involved "profits" from his mail fraud—as opposed to mere reimbursements—Santos mandates that the money laundering count of the superseding indictment (Count Eight) be dismissed. The Court does not reach the same conclusion as to Santos's holding.

In Santos, Justice Scalia wrote for a four-Justice plurality that the term "proceeds" in a related federal money laundering statute, 18 U.S.C. § 1956(a)(1), could be fairly interpreted as either "profits" or "gross receipts."¹ Therefore, Justice Scalia continued, the "rule of lenity," which requires that ambiguous criminal laws be interpreted with lenience toward the defendant, mandates that "proceeds" be interpreted as "profits." Santos, 128 S.Ct. at 2025 (Scalia, J.). The fifth vote in favor of the "profits" interpretation came from Justice Stevens, writing separately and concurring with the judgment. But Justice Stevens suggested that the term could be defined as "profits" in the context of some money laundering operations but as "gross receipts" in others. Id. at 2032 (Stevens, J., concurring) ("[T]his Court need not pick a single definition of `proceeds' applicable to every unlawful activity, no matter how incongruous some applications may be."). For example, Justice Stevens wrote, "the legislative history ... makes it clear that Congress intended the term `proceeds' to include gross revenues from the sale of contraband and the operation of organized crime syndicates involving such sales. But that history sheds no light on how to identify the proceeds of many other types of specified unlawful activities." Id. (footnote omitted).² Because Justice Stevens concluded that a "gross receipts" definition would be "perverse" in the context of Santos—involving an illegal gambling operation—he concurred with the judgment and interpreted the statutory term "proceeds" as "profits." Id. The dissent, authored by Justice Alito and joined by Chief Justice Roberts and Justices Kennedy and Breyer, concluded that "proceeds" should be defined as gross receipts (in the opinion's words, "the total amount brought in"). Id. at 2035-2045 (Alito, J., dissenting).

Justice Scalia, joined by Justices Souter and Ginsburg, took issue with Justice Stevens' position, stating that the Court had "never once" "giving the same word, in the same statutory provision, different meanings in different factual contexts." Id. at 2030 (Scalia, J.). He also disagreed with Justice Stevens' legislative history assessment. Id. at 2030 n. 8. Justice Scalia then, after noting that the holding of the case is necessarily limited by Justice Stevens' opinion, id. at 2031 (citing Marks v. United States, 430 U.S. 188, 193, 97 S.Ct. 990, 51 L.Ed.2d 260 (1977)), offered his own interpretation of the opinion's stare decisis effect:

[T]he narrowness of [Justice Stevens'] ground consists of finding that "proceeds" means "profits" when there is no legislative history to the contrary. That is all that our judgment holds. It does not hold that the outcome is different when contrary legislative history does exist. Justice STEVENS' speculations on that point address a case that is not before him, are the purest of dicta, and form no part of today's holding.

Id. at 2031.

The D.C. Circuit has not yet interpreted Santos's enduring holding, and its sister Circuits are split on the issue.³ In this situation, all that a District Court can do is read Santos and come to its own conclusion. This Court, having done that, does not reach the same conclusion Justice Scalia did as to Santos's holding. To this Court, it appears that when Justices Scalia's and Stevens' opinions are read together, Santos defines "proceeds" as "profits" only in the context of an illegal gambling operation. It does not mandate a definition in the context of defendant's alleged unlawful activity (mail fraud). Accordingly, Santos does not suggest that the Court must dismiss Count Eight of the superseding indictment.

The Court cannot grant defendant's motion [107] for acquittal on either of its theories, and the motion shall therefore be denied.

B. Motion [114] to Dismiss Superseding Indictment as Violative of the Double Jeopardy Clause

If a judge declares a mistrial without being compelled to do so by "manifest necessity," then retrying the defendant on the same charges would violate the Double Jeopardy Clause of the Fifth Amendment. See, e.g., United States v. Perez, 22 U.S. (9 Wheat.) 579, 580, 6 L.Ed. 165 (1824). Defendant claims that his is such a case. Defendant argues that before declaring a mistrial, the Court should have provided additional guidance on the legal issue of "consent." Defendant also argues that the Court erred by declining to poll the foreperson or the jurors individually as to the extent to which the jury was deadlocked. The question presented by the motion, again, is whether the Court's declaration of a mistrial was supported by manifest necessity. The Court concludes that it was and will therefore deny defendant's motion to dismiss.

1. United States v. Wecht Informs the Court's Consideration of This Motion.

Since the parties briefed this issue, the Third Circuit decided United States v. Wecht, 541 F.3d 493 (3d Cir.2008), cert. denied, ___ U.S. ___, 129 S.Ct. 658, 172 L.Ed.2d 616 (2008), a factually similar case which sheds some light on the issue of manifest necessity and the breadth of the trial court's discretion. Because of its applicability, it is discussed here at length before analysis of defendant's motion. Wecht was more complex than defendant's case; it involved forty-one counts of theft, wire fraud, and mail fraud and consumed twenty-three trial days before closing arguments concluded. Id. at 495. After almost one-and-a-half weeks of jury deliberation, the jury sent a note asking:

Out of the 41 counts if any one or more count the jury...