U.S. v. Segal

• Decision Date: 12 January 2004
• Docket Number: No. 02 CR 112.,02 CR 112.
• Parties: UNITED STATES of America v. Michael SEGAL, Daniel Watkins, and Near North Insurance Brokerage, Inc.
• Court: U.S. District Court — Northern District of Illinois

299 F.Supp.2d 840

UNITED STATES of America v. Michael SEGAL, Daniel Watkins, and Near North Insurance Brokerage, Inc.

No. 02 CR 112.

United States District Court, N.D. Illinois, Eastern Division.

January 12, 2004.

COPYRIGHT MATERIAL OMITTED

Daniel E. Reidy, Thomas P. McNulty, Jones Day, Chicago, IL, Lawrence Oliver, II, Perkins Coie, LLC, Chicago, IL, for Michael Segal (1), defendant.

Lawrence Oliver, II, Perkins Coie, LLC, Chicago, IL, for Daniel E Watkins (3), defendant.

Cynthia Louise Giacchetti, Law Office of Cynthia Giacchetti, Chicago, IL, Lawrence Oliver, II, Perkins Coie, LLC, Chicago, IL, Daniel T Brier, Donna A Walsh, Myers, Brier & Kelly, LLP, Scranton, PA, Sal Cognetti, Jr, Foley, Cognetti, Comerford & Cimini, Scranton, PA, for Near North Insurance Brokerage, Inc. (4), defendant.

Virginia M. Kendall, United States Attorney's Office, Chicago, IL, Pretrial Services, Probation Department, for U.S. Attorneys.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

Defendants Michael Segal and Near North Insurance Brokerage, Inc. ("Near North" or "NNIB") have filed, collectively, three different motions to dismiss, (R. 129-1; R. 146-1; R. 147-1), in which they argue that: (1) the second superseding indictment should be dismissed because prosecuting them would violate their due process rights; and (2) specified counts in the second superseding indictment fail to properly allege that Near North or Segal violated a criminal statute. They have also filed two motions for a bill of particulars, (R. 136-1; R. 148-1), and a motion to prevent grand jury abuse, (R. 133-1). For the reasons provided below, we partially grant and partially deny Near North's motion to dismiss, (R. 129-1), and deny Segal's motions to dismiss, the motions for a bill of particulars and the motion to prevent grand jury abuse, (R. 133-1; R. 136-1; R. 146-1; R. 147-1; R. 148-1). Accordingly, Near North is dismissed from count five of the second superseding indictment.

RELEVANT FACTS

On February 14, 2002, the Government filed its first indictment against Segal, which consisted of a single false-statement count. (R. 6, Indictment.) On October 31, 2002, the Government superceded the first indictment and added seven mail-fraud counts, a wire-fraud count, a RICO count and six more false-statement counts. (R. 51, First Superseding Indictment.) The RICO count alleges that Near North was part of the Near North National Insurance Enterprise. (Id., Count 9, ¶ 1.) The RICO count further alleges that Segal, as the principal leader of the enterprise, used "substantial economic resources to threaten to and to conduct expensive retaliatory litigation against those who would oppose his will, question his decisions, or expose his unlawful and unethical conduct." (Id., Count 9, ¶ 4.) Lastly, the RICO count alleges a pattern of racketeering activity that includes twelve mail-fraud acts and three wire-fraud acts. (Id., Count 9, ¶¶ 6-21.) On June 13, 2003, the Government superceded the first superseding indictment in order to add Near North as a defendant in six of the mail-fraud counts (counts two through seven) and all the false-statement counts (counts ten through sixteen). (R. 92, Second Superseding Indictment.)

Mail-fraud count one alleges that Segal and Near North "did devise, intend to devise, and participate in a scheme and artifice to defraud, and to obtain and cause to be obtained the use and benefit of money, funds, credits and other things of value that they misappropriated and misused from a Premium Fund Trust Account (`the Trust') ...; from money and credits due customers; and from inflated and fraudulently obtained premium payments ..." and that they did devise, intend to devise, and participate in a scheme and artifice "to deprive the Trust, various Carriers, customers of NNIB, and others of [their] duty to provide honest services in the operation of NNIB and the maintenance of NNIB's Premium Fund Trust Account ...." (Id., Count One, ¶ 2.) This count further alleges that they "for the purpose of executing the aforesaid scheme and attempting to do so, did knowingly cause to be delivered by mail according to the direction thereon," a renewal application for an insurance producer license. (Id., Count 1, ¶ 15.) Finally, the count alleges that Segal violated 18 U.S.C. §§ 1341 and 1346. The remaining mail-fraud counts (counts two through seven), which are based on different renewal applications, differ from count one in two ways: (1) they allege that both Near North and Segal caused the renewal applications to be mailed; and (2) they do not allege that Near North and Segal violated section 1346.

The false-statement counts (counts ten through sixteen) allege that Near North and Segal "knowingly and with intent to deceive caused to be made a false, material statement to the Illinois Department of Insurance for the purpose of influencing the actions of the Illinois Department of Insurance, by causing a Renewal Application for an Insurance Producer License to be submitted to the Illinois Department of Insurance." (Id., Counts 10-16.) The counts then identify the false statement as Near North and Segal's declaration that they are properly maintaining premiums in a Premium Fund Trust Account. (Id.)

LEGAL STANDARDS

I. Motion to Dismiss

The Federal Rules of Criminal Procedure permit a defendant to "raise by pretrial motion any defenses, objection, or request that the court can determine without a trial of the general issues." Fed. R.Crim.P. 12(b)(2). When considering a motion to dismiss an indictment, a court assumes all facts in the indictment are true and must "view all facts in the light most favorable to the government." United States v. Yashar, 166 F.3d 873, 880 (7th Cir.1999); see also United States v. Pitt-Des Moines, Inc., 970 F.Supp. 1346, 1349 (N.D.Ill.1997) (comparing a motion to dismiss an indictment to a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss); United States v. Andrews, 749 F.Supp. 1520, 1521 (N.D.Ill.1990). "An indictment is sufficient if it `first, contains the elements of the charged offense and fairly informs a defendant of the charge against him which he must defend, and second, enables him to plead double jeopardy as a bar to a future prosecution.'" United States v. Locklear, 97 F.3d 196, 199 (7th Cir.1996) (quoting Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974)). The question before a court on a motion to dismiss is not whether the indictment alleges sufficient facts from which a jury could find that a defendant violated a given statute, but whether the Government "conceivably could produce [such] evidence at trial." United States v. Castor, 558 F.2d 379, 384 (7th Cir.1977). A court should dismiss the indictment only if the Government's inability to produce sufficient evidence "so convincingly appears on the face of the indictment that as a matter of law there need be no necessity for such delay." Id.

II. Bill of Particulars

A bill of particulars should be granted if the indictment does not set forth the elements of the offense charged or does not sufficiently apprise the defendant of the charges to enable him to prepare for trial. United States v. Kendall, 665 F.2d 126, 134 (7th Cir.1981); 41 Am. Jur.2d Indictments and Information § 154 (2003). In determining whether the indictment sufficiently apprises the defendant of the charges, a court can consider the charges' complexity, the indictment's clarity and the availability of discovery. United States v. Swiatek, 632 F.Supp. 985, 988 (N.D.Ill.1986). A defendant, however, is not entitled to the details of the Government's case. United States v. Glecier, 923 F.2d 496, 502 (7th Cir.1991).

III. Abuse of the Grand Jury Process

The government cannot use the grand jury for the "sole or dominant purpose" of obtaining additional information against a defendant after he has been indicted, but it can issue grand jury subpoenas when it contemplates bringing additional charges or adding new defendants. See United States v. Badger, 983 F.2d 1443, 1459 (7th Cir.1993); United States v. Thompson, 944 F.2d 1331, 1337 (7th Cir. 1991) (quoting United States v. Moss, 756 F.2d 329, 332 (4th Cir.1985)); see also United States v. Flemmi, 245 F.3d 24, 28 (1st Cir.2001); United States v. Leung, 40 F.3d 577, 581-82 (2d Cir.1994). The defendant has the burden of establishing that the Government abused the grand jury process. Badger, 983 F.2d at 1459.

ANALYSIS

I. Motions to Dismiss

There are presently three motions to dismiss before the Court: (1) Near North's motion to dismiss¹; (2) Segal's motion to dismiss count nine for prosecutorial vindictiveness; and (3) Segal's renewed motion to dismiss counts nine through sixteen. As a preliminary matter, we deny Segal's renewed motion to dismiss counts nine through sixteen because it only raises arguments that we have already addressed and rejected. The remaining two motions contain two types of arguments: (1) the second superseding indictment should be dismissed because prosecuting Near North or Segal would violate their due process rights; and (2) specified counts fail to properly allege that Near North or Segal violated a criminal statute.

A. Due Process Arguments

Near North and Segal assert that the second superseding indictment should be dismissed because prosecuting them would violate the Due Process Clause. First, Near North and Segal contend that the second superseding indictment contains factually contradictory theories in that it attributes conduct to Near North that was solely attributed to Segal in the previous indictments. Next, Near North and Segal argue that the second superseding indictment should be dismissed due to prosecutorial vindictiveness.

1. Fundamentally Contradictory Theories

Using evidence or arguments to prosecute a defendant that fundamentally contradict evidence or arguments previously used to prosecute a different defendant for the same offense violates the Due...