United States v. O'Brien, 17 CR 239-1
| Decision Date | 29 January 2018 |
| Docket Number | No. 17 CR 239-1,17 CR 239-1 |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. JESSICA ARONG O'BRIEN AND MARIA BARTKO, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION & ORDER
Defendants Jessica Arong O'Brien and Maria Bartko are charged with engaging in a scheme to defraud that involved causing lenders to issue and refinance loans related to two investment properties that O'Brien owned on the south side of Chicago. The indictment charges O'Brien and Bartko with mail fraud in violation of 18 U.S.C. § 1341 in Count I, and it charges O'Brien with bank fraud in violation of 18 U.S.C. § 1344 in Count II. The indictment alleges that defendants' scheme was comprised of a series of transactions in 2004, 2005, 2006, and 2007. R. 1 at 4-7. Of particular relevance here, the indictment alleges that in 2007, Citibank, N.A. ("Citibank") funded a loan1 in the amount of $73,000 for one of the investment properties sold by O'Brien to Bartko using a straw buyer. R. 1 at 10.
Before the Court are two motions: (1) O'Brien's motion to dismiss the indictment based on the statute of limitations and failure to state an offense (R. 139); and (2) O'Brien's motion to dismiss based on pre-indictment delay (R. 141). For the reasons explained below, the Court denies both motions.
Federal Rule of Criminal Procedure 12(b)(3)(B) allows a party to raise by pretrial motion "a defect in the indictment or information, including . . . failure to state an offense." Rule 12(b)(1) more generally allows a party to "raise by pretrial motion any defense, objection, or request that the court can determine without a trial on the merits," including an argument based on the "statute of limitations." Fed. R. Crim. P. 12(b)(1) & (b)(1)-(2) advisory committee note.
Pursuant to Federal Rule of Criminal Procedure 7(c)(1), an "indictment or information must be a plain, concise, and definite written statement of the essential facts constituting the offense charged." The indictment need not "allege in detail the factual proof that will be relied on to support the charges." United States v. Smith, 230 F.3d 300, 306 (7th Cir. 2000). "An indictment is legally sufficient if it (1) states all the elements of the crime charged; (2) adequately informs the defendant of the nature of the charges so that [s]he may prepare a defense; and (3) allows the defendant to plead the judgment as a bar to any future prosecutions." United States v. White, 610 F.3d 956, 958 (7th Cir. 2010).
On a motion to dismiss, "[a]n indictment is reviewed on its face, regardless of the strength or weakness of the government's case." Id. This 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. Segal, 299 F. Supp. 2d 840, 844 (N.D. Ill. 2004) (quoting United States v. Yashar, 166 F.3d 873, 880 (7th Cir. 1999)).
O'Brien moves to dismiss Count I of the indictment based on the statute of limitations and Count II for failure to state an offense. "To secure an indictment for mail . . . fraud" as alleged in Count I, "the government was required to show probable cause to believe that [O'Brien]: (i) participated in a scheme to defraud; (ii) acted with intent to defraud; and (iii) used the mail . . . in furtherance of the fraudulent scheme." United States v. Vincent, 416 F.3d 593, 601 (7th Cir. 2005). Mail fraud generally is governed by the default five-year limitations period for non-capital federal crimes set forth in 18 U.S.C. § 3282(a). But a ten-year statute of limitations applies to mail fraud that "affects a financial institution." 18 U.S.C. § 3293(2). The government relied on the ten-year statute of limitations in 18 U.S.C. § 3293(2) to indict O'Brien when it did.
A ten-year statute of limitations undisputedly applies to the bank fraud charge in Count II. See 18 U.S.C. § 3293(1). But like the statute providing a ten-year limitations period for mail fraud, the statute criminalizing bank fraud contains a "financial institution" requirement. To obtain an indictment for bank fraud, the government needed to establish probable cause to believe that O'Brien "knowinglyexecute[d], or attempt[ed] to execute, a scheme . . . (1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1344.
O'Brien's arguments for dismissal focus on the "financial institution" requirement in the ten-year statute of limitations for mail fraud (18 U.S.C. § 3293(2)) and the statute setting forth the elements of bank fraud (18 U.S.C. § 1344). "Financial institution" is defined to include "an insured depository institution (as defined in section 3(c)(2) of the Federal Deposit Insurance Act ['FDIA'])." 18 U.S.C. § 20. Section 3(c)(2) of the FDIA in turn provides that "[t]he term 'insured depository institution' means any bank or savings association the deposits of which are insured by the Corporation pursuant to this chapter." 12 U.S.C. § 1813(c)(2).
Although the indictment describes a number of transactions comprising the alleged scheme, it only alleges that one of them (a) involved a financial institution (Citibank) and (b) occurred within the ten-year statute of limitations: the $73,000 loan the straw buyer obtained for the purchase of one of O'Brien's two investment properties in 2007. See R. 1. Because this is the only loan that potentially brings this case within the ten-year statute of limitations, it is the focus of O'Brien's motion.
O'Brien claims that, in fact, CitiMortgage funded the $73,000 loan—not Citibank. And CitiMortgage undisputedly did not qualify as a "financial institution" in 2007. See, e.g., United States v. Bouchard, 828 F.3d 116, 124 (2d Cir. 2016) (). O'Brien therefore maintains that the default five-year statute of limitations applies to the mail fraud charge in Count I, and that statute expired well before the government indicted this case. O'Brien further maintains that Count II fails to state an offense because the $73,000 loan alleged to be the subject of bank fraud was not funded by a financial institution.
For several reasons set forth below, this Court declines to dismiss the indictment on these bases.
As explained above, the Court's review at this stage is limited. It must "assume[ ] all facts in the indictment are true," Segal, 299 F. Supp. 2d at 844, and review the indictment on its face, White, 610 F.3d at 958.
The indictment on its face alleges that the "scheme affected a financial institution"—namely, Citibank. R. 1 at 2-3. For purposes of Count I, the indictment specifically alleges that O'Brien and Bartko knew "that false information would be submitted to lenders, including Citibank, N.A., to qualify [the straw buyer] for the [2007] loans." Id. at 7. For purposes of Count II, the indictment specifically alleges that O'Brien "knowingly executed and attempted to execute the scheme to defraudby causing Citibank, N.A., a financial institution, to fund a mortgage loan in the amount of approximately $73,000" for one of the two investment properties sold in 2007. Id. at 10; see also R. 139 at 1 (). The indictment also states that "Citibank N.A." was during the relevant time period a "financial institution[ ], the deposits of which were insured by the Federal Deposit Insurance Corporation." R. 1 at 2.
In other words, the indictment on its face plainly alleges that the mail fraud scheme described in Count I affected Citibank, a financial institution as defined by 18 U.S.C. § 20 and 12 U.S.C. § 1813(c)(2). Count I therefore alleges an offense affecting a financial institution governed by the ten-year statute of limitations. And the indictment on its face plainly alleges that Citibank funded the $73,000 loan described in Count II. Count II thus states the offense of defrauding a financial institution. Accordingly, the indictment is not legally insufficient.
O'Brien urges the Court to consider evidence outside the four corners of the indictment to decide her motion. See Ex. 139 (exhibits). O'Brien cites a Tenth Circuit case, United States v. Hall, 20 F.3d 1084, 1088 (10th Cir. 1994), for the proposition that courts may consider facts outside the indictment on a motion to dismiss. But the Hall court made clear that as a general matter, "[c]ourts should refrain from considering evidence outside the indictment when testing its legal sufficiency." 20 F.3d at 1087. It explained that only under "certain limitedcircumstances" could a district court "go beyond the allegations of the indictment and make predicate findings of fact." Id. at 1088. These circumstances are: "[1] where the operative facts are undisputed and [2] the government fails to object to the district court's consideration of those undisputed facts in making the determination regarding a submissible case." Id. "Under this scenario," the Hall court explained, "a pretrial dismissal is essentially a determination that, as a matter of law, the government is incapable of proving its case beyond a reasonable doubt." Id. (emphasis in original). The court emphasized "that such a scenario is not likely to recur," and it "caution[ed] both the trial courts and counsel that the procedure [t]here employed [wa]s indeed the rare exception." Id.
This case is not "the rare exception" described in Hall. Id. The facts are not "undisputed" (id.)—rather,...
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