U.S. v. Martin

• Decision Date: 19 January 2006
• Docket Number: No. 05 CR.24 MGC.,05 CR.24 MGC.
• Citation: 411 F.Supp.2d 370
• Parties: UNITED STATES of America v. Gregory MARTIN, Defendant.
• Court: U.S. District Court — Southern District of New York

Page 370

411 F.Supp.2d 370

UNITED STATES of America v. Gregory MARTIN, Defendant.

No. 05 CR.24 MGC.

United States District Court, S.D. New York.

January 19, 2006.

Benjamin Gruenstein, U.S. Attorney's Office, SDNY (St. Andw's), David Alan Raskin, U.S. Attorney's Office, SDNY, New York City, for Plaintiff.

Douglas T. Burns, Shaw, Licitra, Gulotta, Esernio & Schwartz, P.C., Shaw Licitra, Garden City, NY, David Scott Smith, New York City, for Defendant.

OPINION

CEDARBAUM, District Judge.

Defendant Gregory Martin moves to dismiss the indictment against him for conspiracy to commit wire fraud and wire fraud. For the reasons that follow, the motion is denied.

BACKGROUND

Martin, together with defendants David Appelbaum and Rene Poulin, is charged with wire fraud under 18 U.S.C. § 1343 and with conspiracy to commit wire fraud. The indictment alleges that the defendants "devised and effectuated a scheme to fix a horse race by giving a racehorse a performance-enhancing substance, and then profit from their actions by placing bets on that racehorse to win a horse race."

Martin moves to dismiss both counts of the indictment on the ground that the acts that the defendants allegedly conspired to undertake do not constitute wire fraud. Martin argues that the scheme defendants allegedly devised was not a "scheme to defraud," within the meaning of the wire fraud statute, and that the use of the wires allegedly contemplated by the conspirators was not in furtherance of such a scheme. Martin also argues that the substantive wire fraud charge must be dismissed because the indictment does not allege that Martin had the requisite fraudulent intent to commit wire fraud and does not allege that Martin used the wires. Furthermore, Martin contends, the indictment does not allege sufficient facts to establish a basis for venue in the Southern District of New York for either charge. Martin also seeks an order releasing the grand jury minutes and for a bill of particulars.

DISCUSSION

I. Conspiracy to Commit Wire Fraud

To the extent that Martin moves to dismiss the indictment because it fails to charge him with a crime, analysis of his claim is limited to an examination of the face of the indictment. "[A]n indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." United States v. Alfonso, 143 F.3d 772, 776 (2d Cir.1998)(quoting Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974)).

To charge Martin with the crime of conspiracy to commit wire fraud, the indictment must allege that Martin "agreed with another to commit the offense" of wire fraud; "that he knowingly engaged in the conspiracy with the specific intent to commit [wire fraud]; and that an overt act in furtherance of the conspiracy was committed." United States v. Monaco, 194 F.3d 381, 386 (2d Cir.1999). Martin argues that the indictment fails to charge conspiracy to commit wire fraud because the acts that the defendants allegedly conspired to commit do not constitute wire fraud.

The wire fraud statute, 18 U.S.C. § 1343, provides that:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.

The "essential elements of a mail [or wire] fraud violation are (1) a scheme to defraud, (2) money or property [as the object of the scheme], and (3) use of the mails [or wires] to further the scheme." Fountain v. United States, 357 F.3d 250, 255 (2d Cir.2004) (alterations in original) (quoting United States v. Dinome, 86 F.3d 277, 283 (2d Cir.1996)).

A. Scheme to Defraud

Martin first argues that the scheme to dope a horse, which he allegedly conspired to devise, is not a "scheme to defraud" within the meaning of the wire fraud statute because the scheme did not involve any misrepresentations or fraudulent omissions. However, a misrepresentation or omission is not a necessary element of a "scheme to defraud" under the wire fraud statute. As the Second Circuit determined in United States v. Trapilo, 130 F.3d 547 (2d Cir.1997), in dismissing defendants' argument that smuggling is not an act within the meaning of a "scheme to defraud," the meaning of "scheme to defraud" is "measured by a nontechnical standard. It is a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general [and] business life of members of society." Id. at 550 n. 3 (internal quotations and citations omitted). The court held that the allegation that defendants engaged in smuggling "without an allegation of misrepresentation or deceit" was sufficient to allege a "scheme to defraud" under the wire fraud statute. Id. ("Because the act of smuggling violates fundamental notions of honesty, fair play and right dealing, it is an act within the meaning of a `scheme to defraud.'"); see also A. Terzi Prods., Inc. v. Theatrical Protective Union, 2 F.Supp.2d 485, 501 (S.D.N.Y.1998)("I read Trapilo as underscoring the accepted notion that a defendant, by his conduct alone, can intend to deceive another and engage in a scheme to defraud, even though the defendant's statements themselves contain no misrepresentations. Smuggling is the perfect example of such conduct because, while smuggling might involve no statement at all, its sole purpose is to conceal what the smuggler is carrying; it is thus inherently a dishonest and deceptive act."). Like the scheme in Trapilo, Martin and his codefendants' scheme did not involve any affirmative misrepresentations. However, breaking the rules of the horserace by doping a horse, like smuggling, violates fundamental notions of honesty, fair play and right dealing and is therefore an act within the meaning of a "scheme to defraud."

Martin also argues that the scheme that the indictment alleges is not a "scheme to defraud" within the meaning of the wire fraud statute because the scheme was not devised with the requisite fraudulent intent. "Essential to a scheme to defraud is fraudulent intent." United States v. D'Amato, 39 F.3d 1249, 1257 (2d Cir.1994). To establish intent, "the government must `prove that defendants contemplated some actual harm or injury to their victims. Only a showing of intended harm will satisfy the element of fraudulent intent.'" United States v. Gabriel, 125 F.3d 89, 96 (2d Cir.1997) (quoting United States v. Starr, 816 F.2d 94, 98 (2d Cir. 1987)).

However, the sufficiency of the government's evidence of the conspirators' fraudulent intent is not considered on a motion to dismiss the indictment. In order to charge a crime, an indictment need only track the language of the statute alleged to have been violated and, if necessary, state the time and place of the offense in approximate terms. United States v. Flaharty, 295 F.3d 182, 198 (2d Cir.2002). Here, the indictment tracks the language of the wire fraud statute and states that the two parts of the alleged "scheme to defraud" were: (1) "to fix a horserace by giving a racehorse a performance-enhancing substance," and then (2) to "profit" from the doping "by placing bets on that racehorse to win a horse race." The defendants could have succeeded in profiting from the scheme only if the bets placed on the doped horse paid out, which necessarily required that those betting on the non-doped horses lose their wagers. The defendants' intent to injure those betting on the non-doped horses may be inferred from the fact that monetary harm to those betting on the non-doped horses was the necessary consequence of the success of their scheme. The indictment therefore charges that the defendants conspired to devise a "scheme to defraud," within the meaning of the wire fraud statute. Whether this scheme and the defendants' intent to harm those betting on the non-doped horses can be proved at trial cannot be determined from the face of the indictment.

B. Deprivation of Money or Property

The wire fraud statute also requires that money or property be the object of the defendant's "scheme to defraud." Fountain v. United States, 357 F.3d 250, 255 (2d Cir.2004). Martin argues that the indictment does not charge conspiracy to commit wire fraud because the alleged "scheme to defraud" did not have money or property as its object. In this case, the only commodities that are alleged to have been the objects of the fraud and that could have been diminished in value by the fraud are the wagers placed on the non-doped horses.

Although Martin cites the decision of the New York Court of Appeals in People v. Kramer, 92 N.Y.2d 529, 683 N.Y.S.2d 743, 706 N.E.2d 731 (1998), in support of his argument that wagered money is not "property," the Kramer opinion does not address whether a wager is property under New York law. The Sixth Circuit, however, has held that a bettor's contract rights arising from the placement of a legal wager are "property." The court stated that:

Where gambling is lawful, as it was in the case at bar, the placing of a bet gives rise to legally enforceable contract rights. These contract rights constitute "property," of course, and at the time which Collier[, the author of the treatise Collier on Bankruptcy,] identifies as "critical" — a time before anyone can know whether the bet will be successful — the property has economic value. The property is not unlike futures contracts purchased on margin. The investor in futures may win big, or his position may be wiped out, but the contractual right to a payoff if...