United States v. Estrada

• Decision Date: 20 July 2012
• Docket Number: No. 12 CR. 99 SHS.,12 CR. 99 SHS.
• Citation: 880 F.Supp.2d 478
• Parties: UNITED STATES of America, v. Franklin ESTRADA, a/k/a “Frank Estrada,” and Igor Royzman, a/k/a “Michael Malloy,” Defendants.
• Court: U.S. District Court — Southern District of New York

880 F.Supp.2d 478

UNITED STATES of America,

v. Franklin ESTRADA, a/k/a “Frank Estrada,” andIgor Royzman, a/k/a “Michael Malloy,” Defendants.

No. 12 CR. 99 SHS.

United States District Court, S.D. New York.

July 20, 2012.

Rachel Maimin, United States Attorney Office, New York, NY, for United States of America.

OPINION & ORDER

SIDNEY H. STEIN, U.S. District Judge.

A grand jury in this District issued a three-count indictment against defendants Franklin Estrada and Igor Royzman in February of this year. Count One alleges that they conspired to commit mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. Counts Two and Three allege that Estrada substantively violated the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343. The substance of the charges is that, from offices in California, Estrada, through Royzman and others, distributed to individuals or businesses in New York and elsewhere certain pills (the “Products”) that they represented to be natural, herbal remedies for erectile dysfunction when, in fact, the pills contained chemical analogues of sildenafil, a synthetic compound and controlled substance that is also the active ingredient in the prescription drug that Pfizer, Inc. markets as “Viagra.” ( See generally Gov't Mem. in Opp. to Def.'s Mot. to Transfer Venue (Gov't Opp.) at 2–5; Dkt. No. 20.) Estrada has moved to transfer these proceedings to the U.S. District Court for the Central District of California pursuant to Federal Rule of Criminal Procedure 21(b), which authorizes the Court to “transfer the proceeding ... to another district for the convenience of the parties, any victim, and the witnesses, and in the interest of justice.” Because Estrada has not shown that any witnesses would be unable to testify in New York, and because a trial in New York would only moderately inconvenience him, the Court declines to exercise its discretion to transfer this case.

Neither defendant challenges the existence of venue in this District. Thus, the Court must determine only whether the interests of justice require transfer for convenience,

consider[ing] such factors as (a) location of the defendants; (b) location of the possible witnesses; (c) location of the events likely to be at issue; (d) location of relevant documents and records; (e) potential for disruption of the defendant['s] businesses if transfer is denied; (f) expenses to be incurred by the parties if transfer is denied; (g) location of defense counsel; (h) relative accessibility of the place of trial; (i) docket conditions of each potential district; and (j) any other special circumstance that might bear on the desirability of transfer.

United States v. Maldonado–Rivera, 922 F.2d 934, 966 (2d Cir.1990) (citing Platt v. Minn. Mining & Mfg. Co., 376 U.S. 240, 243–44, 84 S.Ct. 769, 11 L.Ed.2d 674 (1964)). “No one of these considerations is dispositive, and ‘[i]t remains for the court to try to strike a balance and determine which factors are of greatest importance.’ ” Maldonado–Rivera, 922 F.2d at 966 (citation omitted) (alteration in Maldonado–Rivera ). The Court is also guided by Judge Edward Weinfeld's oft-cited guidance as follows:

As a general rule a criminal prosecution should be retained in the original district. To warrant a transfer from the district where an indictment was properly returned it should appear that a trial there would be so unduly burdensome that fairness requires the transfer to another district of proper venue where a trial would be less burdensome ....

United States v. Posner, 549 F.Supp. 475, 477 (S.D.N.Y.1982) (quoting United States v. U.S. Steel Corp., 233 F.Supp. 154, 157 (S.D.N.Y.1964)). Of course, the general preference notwithstanding, “there are circumstances where transfer is appropriate.”

Posner, 549 F.Supp. at 477. Courts in this district have uniformly placed the burden on the defendant to show that the interests of justice require transfer. See, e.g., United States v. Datta, 797 F.Supp.2d 448, 450 (S.D.N.Y.2011); United States v. Spy Factory, Inc., 951 F.Supp. 450, 464 (S.D.N.Y.1997).

The essence of Estrada's argument is that defendants and their businesses, through which they are alleged to have committed the crimes, are based in Los Angeles; the events at issue are lodged in California; and defense counsel and certain witnesses and documents are also located in California. Estrada is the owner and CEO of Body Basics, Inc., a Los Angeles-based company that imports the Products from abroad and sells them throughout much of the United States. Royzman controls Actra–Rx OSU Corp., which is also based in Los Angeles and is alleged to have distributed some of the Products for Body Basics. Neither corporation has offices outside of California. Estrada and Royzman are accused of conspiring to defraud purchasers into believing that the Products were over-the-counter herbal remedies when, in fact, they were essentially generic versions of the prescription drug Viagra. The government has not alleged that any contact between Estrada and Royzman or between their businesses took place outside California.

The government responds that defendants are alleged to have distributed the Products nationwide, including into this district, and that the government's attorneys and investigators, some of its witnesses, and all of the relevant documents are in New York. The government is ready to proceed to trial before this Court, and the trial is expected to last one to two weeks. With that background, the Court turns to the factors set forth by the U.S. Supreme Court nearly fifty years ago in Platt v. Minnesota Mining & Manufacturing Co., 376 U.S. at 243–44, 84 S.Ct. 769, considering each in turn.

(a) “location of the defendants”

Courts have given this factor special significance. See United States v. Ohran, No. 99 Cr. 142(JSM), 2000 WL 620217, at *3 (S.D.N.Y. May 12, 2000); United States v. Russell, 582 F.Supp. 660, 662 (S.D.N.Y.1984). Both defendants reside in the Los Angeles area, and neither is detained. As a result, defendants would be somewhat inconvenienced by a trial in New York. Thus, as the government conceded at oral argument (Tr. of Arg. dated June 21, 2012 (“Tr.”) at 4), this factor weighs in favor of transfer. Cf. United States v. Stein, 429 F.Supp.2d 633, 645–46 (S.D.N.Y.2006) (denying transfer to home districts in Texas and California despite expected 6 to 8–month–long trial).

(b) “location of the possible witnesses”

Estrada contends that the majority of witnesses are located in California, naming a few in his memorandum and offering to present the Court, in camera, with more names of employees and character witnesses that he anticipates calling at trial. Estrada's burden is to show “specific examples of witnesses' testimony and their inability to testify because of the location of the trial.” Spy Factory, 951 F.Supp. at 457. Apparently recognizing that the bare showing in his papers was insufficient, Estrada added details at the argument on the motion. He represented that, in addition to potential character witnesses, the California-based witnesses would include Estrada himself, the three employees of Body Basics (Tr. at 6), and “a fair sampling” of the “approximately 25 distributors who are in the Southern California area” (Tr. at 5). The substance of the proffered testimony is that these witnesses all believed that the Products were “in fact all natural” (Tr. at 6), and they had no reason to think anything to the contrary—be it statements by Estrada (Tr. at 6–7) or by end-consumers to the distributors (Tr. at 7).

The parties agree that employees' testimony is relevant but dispute the relevance of the proffered absence of consumer complaints to distributors. Even assuming the distributors' testimony is probative of Estrada's intent to defraud, Estrada conceded that he could not identify “any specific person [who] will not be able to come” to New York to testify. (Tr. at 10.) Further, he has made only a minimal showing of inconvenience given the large number of direct airline flights between New York and Los Angeles each day. Thus, Estrada's contention here is actually limited to the cost to him of transporting his witnesses to New York for trial, which is a separate factor. Moreover, counterbalancing defendants' witnesses are the government's New York-based witnesses, including “distributors of the Products ... [and] law enforcement agents based in the New York metropolitan area.” (Gov't Opp. at 13.) Accordingly, this factor does not favor transfer.

(c) “location of the events likely to be at issue”

The majority of “the events likely to be at issue” are alleged to have occurred in Los Angeles. The government relies on defendants' alleged distribution of the Products in the New York area to counterbalance defendant's contention that Los Angeles is the “nerve center” of the alleged fraud. See United States v. Clark, 360 F.Supp. 936, 941–43 (S.D.N.Y.1973) (transferring a securities fraud prosecution because “the great majority of the events and transactions which will be in question” occurred in, or closer to, the transferee district, despite statements made in New York). The Court does not find that the nationwide distribution of the Products is at issue here for purposes of the Rule 21(b) analysis because Estrada does not dispute that the Products were sold nationwide. Estrada does contend that the evidence will not support the government's allegations regarding what the Products contained and whether defendants knowingly misrepresented their contents—as evidenced by events that are concentrated in Los Angeles, with the exception of lab tests done in Illinois. ( See Tr. at 12–14.) Thus, Los Angeles and Illinois are the locations of the events at issue.

Still, this factor is not particularly persuasive when defendants are alleged to have intentionally projected their fraud nationwide, including into this District. In Spy Factory, as here, the defendants were alleged to have developed a...