United States v. Han, Criminal Action No. 15–142 (JEB)

• Decision Date: 01 December 2017
• Docket Number: Criminal Action No. 15–142 (JEB)
• Parties: UNITED STATES of America v. Michael Sang HAN, Defendant.
• Court: U.S. District Court — District of Columbia

280 F.Supp.3d 144

UNITED STATES of America

v.Michael Sang HAN, Defendant.

Criminal Action No. 15–142 (JEB)

United States District Court, District of Columbia.

Signed December 1, 2017

Denise A. Simmonds, Derrick L. Williams, U.S. Attorney's Office for the District of Columbia, Matthew Michael Graves, DLA Piper LLP (US), Washington, DC, for Plaintiff.

A.J. Kramer, Danielle Courtney JahnFederal Public Defender for the District of Columbia, Alexandre H. Rene, Colleen A. Conry, David A. Nasse, Kia A. Grant, Ropes & Gray LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

Defendant Michael Han allegedly promised investors that his company Envion would usher in a black gold rush by turning plastic back into oil. According to the Government, although that concept never materialized, it did not stop Han from stringing along his financers, ultimately defrauding them out of nearly $40 million. With trial a couple of months away, Defendant now brings several Motions challenging the validity of the Indictment. Specifically, he asks the Court to: (1) require the Government to provide a bill of particulars; (2) dismiss Counts 10 and 11 as lacking venue; (3) dismiss Count 12 for first-degree fraud as duplicative of the wire-fraud charges (Counts 1 and 2); and (4) dismiss Count 3 for securities fraud as failing to state an offense. Finding no merit in any of these positions, the Court will deny all of the Motions.

I. Background

On September 14, 2017, a grand jury returned a 12–count superseding Indictment against Defendant. In considering Han's Motions at this stage, the Court takes the facts as alleged in the Indictment as true. See United States v. Ballestas, 795 F.3d 138, 149 (D.C. Cir. 2015). A very brief synopsis follows here, while facts pertinent to particular Motions are set forth in the corresponding Analysis sections below.

Beginning in early 2004 and continuing until at least November 2011, Han was Chairman, Chief Executive Officer, and President of science and technology companies Envion Inc. and Envion Industries, LLC. See Indictment, ¶ 1. During this time, Defendant resided in, and Envion operated out of, the District of Columbia, Virginia, and Florida. Id., ¶¶ 1, 2. Claiming that Envion owned a U.S. patent for a machine that could turn plastic into oil—the "EZ Oil Generator"—Han solicited investments for the company. Id., ¶ 2. Two investors ponied up nearly $40 million to support Envion's mission and growth. Id., ¶ 14. Particularly relevant here is an October 2010 investment of $20 million from Defendant's main backer. Id., ¶ 39. After they agreed on the terms, Han instructed a bank to send the $20 million to his personal bank account. Id., ¶ 40. Approximately two months later, Defendant emailed the investor a promissory note for that sum. Id., ¶ 42.

Despite the nearly $40 million in total investments, Envion never actually owned the claimed patent nor had the capability to create or deliver oil generators. Id., ¶ 12. Instead, Han diverted the money for his personal benefit, including purchasing two multi-million-dollar pieces of real estate, using millions to pay off credit-card balances, and withdrawing hundreds of thousands of dollars in cash. Id., ¶¶ 29–30, 38, 41.

Based on this scheme, the Government charged Han with two counts of wire fraud, 18 U.S.C. § 1343 ; one count of securities fraud, 15 U.S.C. §§ 78j(b), 78ff ; six counts of engaging in unlawful monetary transactions, 18 U.S.C. § 1957 ; two counts of tax evasion, 26 U.S.C. § 7201 ; and one count of first-degree fraud, D.C. Code § 22–3221(a). A trial is set to take place in February 2018.

II. Legal Standard

Under Federal Rule of Criminal Procedure 12, a defendant may, before trial, allege that an indictment is facially defective on the basis of duplicity, multiplicity, "lack of specificity, improper joinder, [or] failure to state an offense." In reviewing such a motion, the court is "limited to reviewing the face of the indictment and, more specifically, the language used to charge the crimes." United States v. Sunia, 643 F.Supp.2d 51, 60 (D.D.C. 2009) (quoting United States v. Sharpe, 438 F.3d 1257, 1263 (11th Cir. 2006) ) (emphasis in original); see United States v. Hitt, 249 F.3d 1010, 1015 (D.C. Cir. 2001). "[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." Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974). The court presumes the allegations in the indictment are true and "may not dismiss an indictment ... on a determination of facts that should have been developed at trial." United States v. Engle, 676 F.3d 405, 415 (4th Cir. 2012) (citation omitted).

III. Analysis

Han argues in his multiple Motions that the Indictment here is flawed for four reasons: (1) it does not contain sufficient detail to allow him to mount a defense; (2) D.C. is not the proper venue for the tax-evasion charges; (3) first-degree fraud under the D.C. Code is duplicative of the federal wire-fraud counts; and (4) Count 3 does not state an offense because the promissory notes were not "securities" under the Exchange Act. The Court considers each in turn.

A. Bill of Particulars

The Court can swiftly dispose of Defendant's Motion for a Bill of Particulars. See ECF No. 39. While an indictment need only allege "the essential facts constituting the offense charged," Fed. R. Crim. P. 7(c)(1), a defendant may request additional information through a bill of particulars "to ensure that the charges brought against [him] are stated with enough precision to allow [him] to understand the charges, to prepare a defense, and perhaps also to be protected against retrial on the same charges." United States v. Butler, 822 F.2d 1191, 1193 (D.C. Cir. 1987). Unlike a Rule 12 motion, the court may look beyond the indictment to determine, in its discretion, whether to direct the Government to file a bill of particulars. See id.; Fed. R. Crim. P. 7(f). "[I]f the indictment is sufficiently specific, or if the requested information is available in some other form, then a bill of particulars" is generally not justified. Butler, 822 F.2d at 1193. A defendant may not use a bill of particulars as a "discovery tool or a devise [sic ] for allowing the defense to preview the government's theories or evidence." United States v. Ramirez, 54 F.Supp.2d 25, 29 (D.D.C. 1999).

Defendant here does not contend that the Indictment fails to set out the required elements of each offense, but instead asserts that the Government should "identify with particularity the conduct underlying the aforementioned charges." Mot. at 8. Han asks for the "basis" for the fraud allegations, details of his allegedly false statements, the "precise representations that are the basis of the securities fraud charge," and "the amount of corporate and personal income tax allegedly due and owed by" him. Id. at 7–10. The Government counters that the parties have engaged in protracted and substantial discovery, which included the production of all of the information that Defendant now seeks. See ECF No. 52 (Opposition) at 7. Han also participated in two separate reverse-proffer sessions, during which "the Government discussed its case in detail and provided Defendant with a set of exemplar documents illustrating" the fraud. Id. at 9.

The Court gleans from the Government's Opposition (to which Defendant did not file a Reply) that all of the requested information has been provided to him either in discovery, the Statement of Offense, or in the Opposition itself. A bill of particulars is meant to allow a defendant to properly prepare for trial, not provide a method to force the prosecution to connect every dot in its case. See Butler, 822 F.2d at 1193–94 (affirming district court's denial of request for bill of particulars asking government to state approximate times and places defendant participated in alleged conspiracy). Defendant's Motion for a Bill of Particulars will thus be denied.

B. Venue (Counts 10 and 11)

Han next moves to dismiss the tax-evasion counts (10 and 11) on the ground that venue is not proper in the District. See ECF No. 45. The Government has a choice of forum in which to prosecute but still ultimately bears the burden of establishing proper venue by a preponderance of the evidence. See United States v. Lam Kwong–Wah, 924 F.2d 298, 301 (D.C. Cir. 1991). The Court views such evidence in the light most favorable to the Government when determining whether it has done so. Id.

The Indictment charges Han with violations of 26 U.S.C. § 7201, the prosecution of which requires a willful "affirmative act constituting an evasion or attempted evasion of" a tax deficiency. Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965). Tax evasion is a continuing offense, meaning that it may be prosecuted in any jurisdiction "through which a process of wrongdoing moves." United States v. Johnson, 323 U.S. 273, 276, 65 S.Ct. 249, 89 L.Ed. 236 (1944) ; see also 18 U.S.C. § 3237(a) (allowing for "any offense against the United States [that is] begun in one district and completed in another, or committed in more than one district" to be "prosecuted in any district in which such offense was begun, continued, or completed"). The offense is not completed until the person's tax return is filed, signed, and mailed, but it begins whenever the defendant makes a "willful attempt to defeat and evade" tax liability. Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 87 L.Ed. 418 (1943). Venue is thus proper in any district where the defendant "beg[a]n, continued, or completed" an affirmative act with a "tax evasion motive." United States v. Strawberry, 892 F.Supp. 519, 521 (S.D.N.Y. 1995).

Here, Han argues that § 7201 requires that h...