United States v. Blechman, 10-40095-01/02-SAC

• Decision Date: 22 June 2011
• Docket Number: No. 10-40095-01/02-SAC,10-40095-01/02-SAC
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. ROBERT ANDREW BLECHMAN and MICHAEL N. SOFRIS, Defendants.
• Court: U.S. District Court — District of Kansas

UNITED STATES OF AMERICA, Plaintiff, v. ROBERT ANDREW BLECHMAN and MICHAEL N. SOFRIS, Defendants.

No. 10-40095-01/02-SAC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

Dated: June 22, 2011

MEMORANDUM AND ORDER

The case comes before the court on the following pretrial motions filed in response to the government's first superseding indictment. The defendant Robert Andrew Blechman has filed: motion to strike language in indictment as surplusage (Dk. 77); motion to dismiss count one for lack of venue (Dk. 78); and motion to renew (Dk. 79) his prior motions to dismiss count two (Dk. 33), motion to dismiss count two as an unconstitutional exercise of the court's power of contempt (Dk. 34), motion to transfer venue (Dk. 35), and motion for a James hearing (Dk. 36). The defendant Michael N. Sofris has filed a motion to strike prejudicial surplusage from the indictment (Dk. 80); motion to dismiss indictment (Dk. 81); motion to join defendant Blechman's motion to dismiss count one for lack of venue (Dk. 83); and motion to join the defendant Blechman's motion to renew prior motions (Dk. 84). The government has filed its consolidatedresponse. (Dk. 89).

On June 8, 2011, the court heard the parties' oral arguments on these motions. The court granted the defendant Blechman's oral motion to join the defendant Sofris's motions (Dks. 80 and 81). The government had no objection to Blechman's motion to join.

INDICTMENTS

The original indictment and superseding indictments charge both defendants with a single count of conspiracy in violation of 18 U.S.C. § 371 and a single count of criminal contempt, 18 U.S.C. §§ 2 & 401 with reference to § 1348(c). The defendants filed pretrial motions challenging both counts of the original indictment, and the court, in part, granted the defendants' motion to dismiss count one, as "the undisputed operative facts [peculiar to the issue of venue] establish as a matter of law that the government is incapable of proving this district to be a proper venue for count one." (Dk. 59, p. 21).

In its consolidated response, the government has chosen to reveal that the court's prior order prompted its counsel to consult with its appellate section over appealing that order. The government, however, did not take an immediate appeal. Instead, "it was decided that this Court's concerns could be and should be first addressed by a Superseding Indictment to correct defects this Court identified in the original indictment."(Dk. 89, p. 2).

Of the changes found in the superseding indictment, the more significant ones are as follow. There are five additional pages of background allegations, most of which are set forth under the heading of "THE CONSPIRACY." (Dk. 62, pp. 2-10). The specific charging language in count one clearly establishes the conspiracy charge under 18 U.S.C. § 371 to be an agreement to commit the criminal offense of contempt, 18 U.S.C. § 401(3), by committing the crime of making a material false declaration, 18 U.S.C. § 152, in the Statement of Financial Affairs and Schedule F in Blechman's bankruptcy petition filed on June 15, 2010. (Dk. 62, pp. 10-11).¹For ease of later reference, the court will set out some of the additional allegations that are pertinent to the defendants' pending motions.

The first ten pages of the superseding indictment lay out twenty paragraphs of background allegations with seventeen of them included under the title of "THE CONSPIRACY." (Dk. 62). Paragraph four opens this section with the allegation that:

It was the object of the conspiracy that starting in approximately

2002, the precise date being unknown to the Grand Jury, BLECHMAN and SOFRIS commenced using the bankruptcy system to serially file petitions to access the automatic stay provisions of the United States Bankruptcy Code, and commit bankruptcy fraud, as a litigation tactic to prevent foreclosure on BLECHMAN's personal residence at 11901 Lucile Street, Culver City, California. On November 8, 2002, BLECHMAN filed his first petition, a Chapter 7 bankruptcy petition in Bankruptcy Court in the Central District of California. Upon filing the bankruptcy petition the automatic stay provision of the Bankruptcy Code prevented BLECHMAN's creditors from foreclosing on his residence. Through serial filings and creations of trusts over the course of the next eight to ten years BLECHMAN and SOFRIS enabled BLECHMAN to stay in the house without making any payments of mortgage, rents or interest on the residence. These bankruptcy filings and creations of trusts were overt acts in furtherance of their conspiracy.

(Dk. 62, pp. 2-3). Paragraph five alleges that "[o]n September 11, 2003, as an overt act in the continuing conspiracy between BLECHMAN and SOFRIS," a trust was created. Id. at 3. Paragraph six alleges Blechman filed bankruptcy petitions in 2007 and 2008. Id. Paragraphs seven through fourteen allege details regarding the prosecution and conviction of the defendant Blechman in case number 08-40008-JAR. Another overt act is included in ¶ 10 that alleges:

The federal criminal case against Blechman, case number 08-40008-JAR, proceeded to jury trial. During the trial MICHAEL N. SOFRIS (hereinafter "SOFRIS" or "Defendant"), testified in Kansas on behalf of BLECHMAN as a character witness. This testimony was an overt act in the conspiracy between BLECHMAN and SOFRIS in an effort to exonerate BLECHMAN of illegal conduct. During SOFRIS' testimony he identified himself as the employer and legal representative of BLECHMAN. SOFRIS also testified that he and BLECHMAN trained bankruptcy petition preparers on what needed to be disclosed on the petitions. On January 16, 2009, the jury found BLECHMAN guilty on 13 felony counts.

(Dk. 62, pp. 4-5 (footnote omitted)).

Paragraph 13 describes Blechman's sentence and Judge Robinson's order that placed Blechman on bond pending appeal:

On January 21, 2010, BLECHMAN was also sentenced to imprisonment for 18 months on each of Counts 1 through 7, to be served concurrently with each other; 2 years supervised release as to Count 1, and 3 years of supervised release as to Counts 2-7, to be served concurrently with each other; and imposed a $700 total special assessment. At the time of sentencing the defendant was placed on bond pending appeal pursuant to an order issued by Judge Robinson. In that order Judge Robinson simply noted that:

"The terms of the previous Order Setting Conditions of Release and the unsecured Appearance Bond in the amount of $25,000 (Docs. 42 and 43) shall remain in force and effect pending appeal."

Doc. 195, Case number 08040008-JAR. (sic)

(Dk. 62, pp. 5-6).

Finally, the superseding indictment adds two paragraphs that allege certain events as having some connection to Kansas and that also label the same events as "overt acts":

15) Sometime between March through May, 2010, SOFRIS called BLECHMAN'S criminal defense lawyer, Christopher Joseph, in Topeka, Kansas, to inquire if the case was on appeal or otherwise request a status report. This was an overt act in the continuing conspiracy between SOFRIS and BLECHMAN to establish a defense and/or justification for concealing BLECHMAN's felony conviction and the Final Order of forfeiture judgment entered by Judge Robinson in the amount of $1,063,176.30, in a Bankruptcy Petition BLECHMAN and SOFRIS were preparing to file to obtain an automatic stay to substitute for the stay that was lifted in the bankruptcy case of Maxine Blechman. On SOFRIS' website he advises potential clients:

"Chapter 11 cases are similar to Chapter 13's, but are much more flexible. A Chapter 11 proceeding, is a much-expanded version of a Chapter 13 designed primarily for large businesses,partnerships, and corporations, though individuals can file a Chapter 11 . . . The procedures are complex, and involve the selling of a plan to creditors who ultimately will vote on whether to accept the plan."

BLECHMAN and SOFRIS were well aware that they could not sell a plan to BLECHMAN's creditors knowing he was facing 18 months in federal prison and a forfeiture judgment in the amount of $1,063,176.30

. . . .

19) September 23, 2010, SOFRIS committed an overt act in furtherance of the continuing conspiracy involving SOFRIS and BLECHMAN, by calling into Kansas and leaving the following voice mail with an Assistant United States Attorney in furtherance of the conspiracy to attempt to provide a defense and/or justification for concealing the felony convictions of BLECHMAN and forfeiture judgment entered by Judge Robinson in the amount of $1,063,176.30 on January 4, 2010:

"basically when I spoke to Chris Joseph and Robert Blechman they said that the case was appealed and therefore it wasn't a final judgment. I can't . . . um, I've looked at the law and is split in different circuits between your's and ours and I just, you know have, don't have any fixed cite, you know, but that's where it is."

(Dk. 62, pp. 6-7, 9).

BLECHMAN'S MOTION TO DISMISS COUNT ONE FOR LACK OF VENUE (Dk. 78) AND SOFRIS'S MOTION TO JOIN (Dk. 83).

After incorporating the factual allegations in ¶¶ 1-20, count one of the superseding indictment charges that:

Beginning sometime in approximately 2002, the precise date being unknown to the grand jury, and continuing at least through October 10, 2010, upon the return of the initial indictment in this case, the defendants herein,

ROBERT ANDREW BLECHMAN

&

MICHAEL N. SOFRIS

combined, conspired, confederated and agreed to commit offensesagainst the United States of America, in the District of Kansas and elsewhere, to wit: they knowingly, wilfully and unlawfully disobeyed and resisted a lawful writ, process order, rule, decree and command, i.e., a criminal contempt in violation of Title 18 United States Code, Section 401(3), with reference to Title 18 United States Code, Section 3148(c), by committing the crime of knowingly and fraudulently making a material false declaration, certification, verification and statement under penalty of perjury in relation to a bankruptcy case, that is

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