United States v. Ernst
| Decision Date | 23 November 2020 |
| Docket Number | Criminal No. 19-10081-IT |
| Citation | 502 F.Supp.3d 637 |
| Parties | UNITED STATES of America, v. Gordon ERNST, Donna Heinel, William Ferguson, and Jovan Vavic, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Eric S. Rosen, Alexia R. De Vincentis, Carol E. Head, Justin D. O'Connell, Kristen A. Kearney, Leslie Wright, United States Attorney's Office Boston, MA, for United States of America.
Megan A. Siddall, Seth B. Orkand, Tracy A. Miner, Miner Orkand Siddall LLP, Boston, MA, for Defendant Gordon Ernst.
Casey Clark, Pro Hac Vice, Jennifer Lieser, Pro Hac Vice, Nina Marino, Pro Hac Vice, Richard Kaplan, Pro Hac Vice, Kaplan Marino, P.C., Beverly Hills, CA, Michelle R. Peirce, Donoghue, Barrett & Singal, PC, Boston, MA, for Defendant Donna Heinel.
Dane C. Ball, Pro Hac Vice, Shaun G. Clarke, Pro Hac Vice, Alexander M. Wolf, Smyser Kaplan & Veselka LLP, Houston, TX, Kearns Davis, Pro Hac Vice, Brooks Pierce McLendon Humphrey & Leonard LLP, Greensboro, NC, for Defendant William Ferguson.
Stephen G. Larson, Pro Hac Vice, Koren L. Bell, Pro Hac Vice, Paul Rigali, Pro Hac Vice, Larson O'Brien LLP, Los Angeles, CA, Irwin B. Schwartz, Nicholas R. Cassie, Bla Schwartz, PC, Westwood, MA, for Defendant Jovan Vavic.
Indira Talwani, United States District Judge After Defendants Gordon Ernst, William Ferguson, Donna Heinel, and Jovan Vavic moved to dismiss1 a one-count Indictment [#1] charging them and others with a Racketeering Conspiracy, the government filed a 165-paragraph Superseding Indictment [#272], again alleging Racketeering Conspiracy but adding factual allegations and twenty-one new counts. Defendants Ernst, Ferguson, Heinel, and Vavic sought dismissal of the Superseding Indictment. Motion to Dismiss as to Heinel [#331]; Motion to Dismiss as to Vavic [#333]; Motion to Join as to Ferguson [#338]; Motion to Join as to Ernst [#337]; Motion to Join as to Vavic [#465]. Following a hearing on the motions, the government noted its intent to supersede again to "address some of the concerns the Court identified at the recent hearing." Gov't’s Proposed Jury Instructions 3 [#490]. The government subsequently filed a Second Superseding Indictment [#505], adding further factual allegations and charges.
Defendants have expressed concern that by superseding, the government has again mooted the Defendants’ motions to dismiss after the Defendants engaged in resource-intensive briefing and without resolution of the substantive legal issues raised in Defendants’ motions. Status Report 4 [#537]. As a matter of law in this Circuit, however, "the grand jury's return of a superseding indictment does not void the original indictment." United States v. Vavlitis, 9 F.3d 206, 209 (1st Cir. 1993) (). Accordingly, in the interest of resolving the disputed legal issues while conserving the parties’ resources, the court addresses the pending motions as they pertain to the Superseding Indictment [#272]. For the reasons discussed below, the court rejects various theories put forth by the government as to how these Defendants may be proven guilty of the offenses charged. Nonetheless, because the Superseding Indictment meets the minimal requirements of technical sufficiency so as to call for a trial on the merits, the charges survive. Accordingly, Defendants’ motions to dismiss are DENIED.2
In or about 2007, Rick Singer founded the Edge College & Career Network, LLC (also known as "The Key"). Superseding Indictment ("SI") ¶ 15 [#272]. The Key operated as a for-profit college counseling and preparation business. Id. In or about 2012, Singer founded the Key Worldwide Foundation ("KWF"), a purported charity, as a non-profit corporation. Id. ¶ 16. The government alleges that, together, The Key and KWF ("the Key Enterprise") was an ongoing organization whose members functioned as a continuing unit with a common purpose of achieving the objectives of the enterprise. Id. ¶ 17. The government alleges these objectives included: (a) to facilitate cheating on college entrance exams; (b) to facilitate the admission of students to elite universities as recruited athletes, with little or no regard for their athletic abilities; (c) to enrich Defendants and Singer personally; and, (d) to provide additional funds for designated accounts associated with university athletic programs controlled by Defendants. Id. ¶ 36.
The Superseding Indictment alleges that Defendants conspired to further the alleged enterprise by (a) facilitating cheating on ACT and SAT exams; (b) taking high school and college classes on behalf of students and submitting completed coursework to universities as if the students had taken the classes themselves; (c) designating applicants as purported recruits for competitive college athletic teams with little or no regard for the applicants’ athletic abilities, in exchange for bribes; and (d) concealing the nature and source of bribe payments by funneling payments through KWF's "charitable" accounts. Id. ¶ 37.
Donna Heinel was employed as the senior associate athletic director at the University of Southern California ("USC"). Id. ¶ 2. The Superseding Indictment alleges that Singer bribed Heinel to designate students as recruited athletes, and that Heinel accepted these bribes. Id. ¶ 52. According to the Superseding Indictment, between 2014 and 2018, Singer's clients made payments of more than $1.3 million (between $50,000 and $100,000 per student) to USC accounts controlled by Heinel, typically to an account dedicated to the USC Women's Athletic Board, and in addition, Singer directed payments of $20,000 per month from KWF to Heinel personally as part of a sham consulting agreement. Id. ¶ 60.
Jovan Vavic was the water polo coach at USC. Id. ¶ 7. The Superseding Indictment alleges that Singer bribed Vavic to designate students as recruited athletes, and that Vavic accepted these bribes. Id. ¶ 52. The payments to Vavic allegedly included $250,000 to a USC account controlled by Vavic that funded USC's water polo team and private school tuition payments for Vavic's children made under the guise of a fabricated scholarship from KWF. Id. ¶¶ 55, 57.
Ferguson was employed as the women's volleyball coach at Wake Forest University ("Wake Forest"). Id. ¶ 5. The Superseding Indictment alleges that in or about 2017, Singer sent a total of $100,000 from one of KWF's charitable accounts to Ferguson, including a $10,000 check to the Wake Forest Deacon Club, a $40,000 check to Wake Forest Women's Volleyball, and a $50,000 check to a private volleyball camp that Ferguson controlled. Id. ¶ 116. The Superseding Indictment alleges that, in return, Ferguson agreed to designate the daughter of one of Singer's clients as a recruit to the women's volleyball team, facilitating her admission to Wake Forest. Id. ¶ 117.
Ernst was employed as the head coach of men's and women's tennis at Georgetown University ("Georgetown"). Id. ¶ 1. The Superseding Indictment alleges that between 2007 and 2018, Singer paid Ernst bribes, falsely labelled as "consulting" fees, totaling more than $2.7 million. Id. ¶ 86. The Superseding Indictment alleges that in exchange for the bribes, Ernst designated at least 12 applicants as recruits for the Georgetown tennis teams, including students who did not play tennis competitively, thereby facilitating their admission to Georgetown. Id. ¶ 87.
Count One of the Superseding Indictment charges all Defendants with Racketeering Conspiracy in violation of 18 U.S.C. § 1962(d). SI ¶ 144 [#272].
Count Two of the Superseding Indictment charges all Defendants with conspiracy to commit mail and wire fraud and honest services mail and wire fraud in violation of 18 U.S.C. § 1349. Id. ¶ 147.
Counts Three and Four allege that Heinel and Ernst, respectively, conspired to commit federal programs bribery in violation of 18 U.S.C. § 371. Id. ¶¶ 149, 151.
Count Six alleges that Ernst committed federal programs bribery, in violation of 18 U.S.C. § 666(a)(1)(B). Id. ¶ 155.
Counts Seven, Ten through Sixteen, and Eighteen, charge Ernst, Heinel, and Vavic with individual substantive counts of wire fraud and honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346. Id. ¶ 157.
Counts Nineteen and Twenty-One charge Ernst and Heinel, respectively, with substantive mail fraud and honest services mail fraud, in violation of 18 U.S.C. §§ 1341 and 1346. Id. ¶ 159a.
Count Twenty-Two charges Ernst with money laundering in violation of 18 U.S.C. § 1957. Id. ¶ 159b.
Pursuant to Federal Rule of Criminal Procedure Rule 12(b)(1), "[a] party may raise by pretrial motion any defense ... that the court can determine without a trial on the merits." Defendants’ motions here are brought under Rule 7(c)(1), which provides that an indictment must provide "a plain, concise, and definite written statement of the essential facts constituting the offense charged." This rule derives from the Fifth Amendment's guarantee that defendants be first indicted by a grand jury before being held to answer for a criminal charge and the Sixth Amendment's guarantee for the accused "to be informed of the nature and cause of the accusation." United States v. Stepanets, 879 F.3d 367, 372 (1st Cir. 2018) ).
A court must exercise its authority to dismiss cautiously, however, because dismissing an indictment "directly encroaches upon the fundamental role of the grand jury." Whitehouse v. U.S. D. Ct. for the D. of R.I., 53 F.3d 1349, 1360 (1st Cir. 1995). "[I]n the ordinary course of events, a technically sufficient indictment handed down by a duly empaneled grand jury ‘is enough to call for trial of the charge on the merits.’ " United States v. Guerrier, 669 F.3d 1, 4 (1st Cir. 2011) (quoting Costello v....
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