United States v. Hayes

• Decision Date: 03 August 2015
• Docket Number: No. 12 mj 3229(PAC)(JCF).,12 mj 3229(PAC)(JCF).
• Citation: 118 F.Supp.3d 620
• Parties: UNITED STATES of America, v. Tom Alexander William HAYES and Roger Darin, Defendants.
• Court: U.S. District Court — Southern District of New York

118 F.Supp.3d 620

UNITED STATES of America,

v.Tom Alexander William HAYES and Roger Darin, Defendants.

No. 12 mj 3229(PAC)(JCF).

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

Signed Aug. 3, 2015.

Thomas B.W. Hall, U.S. Department of Justice, Washington, DC, Daniel Adam Braun, William John Stellmach, U.S. Attorney's Office, Elizabeth B. Prewitt, United States Department of Justice, New York, NY, for United States of America.

Alexander A. Berengaut, Bruce Allen Baird, James M. Garland, Covington & Burling, L.L.P., Washington, DC, for Defendants.

ORDER PARTIALLY ADOPTING MEMORANDUM & ORDER

PAUL A. CROTTY, District Judge:

Defendant Roger Darin, a Swiss citizen residing in Switzerland, moves to dismiss a criminal complaint which charges him with conspiracy to manipulate the LIBOR¹ for Yen in violation of 18 U.S.C. § 1343 (" Section 1343"). Darin argues that the complaint violates his Fifth Amendment right to due process because he lacked a sufficient nexus to the United States and received insufficient notice that the alleged conduct was criminal. Darin also argues that Section 1343 cannot be applied extraterritorially to cover his acts which allegedly occurred outside the United States.

The Government responds that Darin is not entitled to Fifth Amendment protection at this time and that, in any event, the Court should decline to rule on the merits of Darin's motion under the fugitive disentitlement doctrine. If the Court were to rule on the merits, the Government contends that the criminal complaint alleges a domestic application of Section 1343 and that the Fifth Amendment nexus and notice requirements are satisfied.

After extensive briefing and an oral hearing, Magistrate Judge Francis issued a Memorandum and Order ("Order") on March 20, 2015. Magistrate Judge Francis determined that Darin was entitled to Fifth Amendment protection and declined to apply the fugitive disentitlement doctrine. The Order also found that the complaint alleged a domestic application of Section 1343 and satisfied the Fifth Amendment nexus and notice requirements.

Darin objected to the Order's conclusion that Section 1343 was being applied domestically and that the nexus and notice requirements were satisfied. The Government objected to the Order's failure to apply the fugitive disentitlement doctrine. Neither party objected to the Order's conclusion that Darin was protected by the Fifth Amendment; finding no clear error, the Court, therefore, adopts that section of the Order in full. See Order 4–9.

On June 23, 2015, the Court heard oral arguments in the matter. After considering the arguments made in court, as well as the lengthy memorandums submitted by each party, the Court determines that the fugitive disentitlement doctrine bars Darin's motion to dismiss. But even if the motion were not barred, the complaint alleges a domestic application of Section 1343 and satisfies both the nexus and notice requirements of the Fifth Amendment. Accordingly, Darin's motion to dismiss is DENIED.

BACKGROUND

On December 12, 2012, the Government filed a criminal complaint against Roger Darin,² alleging he conspired to commit wire fraud in violation of Section 1343 by manipulating the LIBOR for Yen. From 2006 to 2009, Darin allegedly conspired to falsify UBS's "daily Yen LIBOR submissions to the [British Bankers' Association] regarding the interest rates at which UBS could borrow reasonable sums denominated in Yen from other banks." Compl. ¶ 21(a). The complaint alleges that these submissions caused "the final Yen LIBOR fixings published by Thomson Reuters to move in directions favorable to UBS trading positions in Yen LIBOR-based derivative products." Id. The complaint also alleges that Darin "caused the publication of manipulated interest rate information in New York, New York." Id. at ¶ 2.

Pursuant to the complaint, Magistrate Judge Maas issued an arrest warrant for Darin on December 12, 2012. Darin has not yet been arrested since he is a Swiss citizen, residing in Switzerland. Nor has Darin submitted to the Court's jurisdiction—he "appears" solely through his lawyers, whom he retained to dismiss the complaint.

DISCUSSION

I. Legal Standard

The Court construes Magistrate Judge Francis's Order as a criminal Report and Recommendation. See Fed.R.Crim.P. 59. Under Rule 59(b)(3), if a party objects to a Report and Recommendation for a dispositive matter, the Court must consider the matter de novo. Accordingly, since Darin objects to the Order's failure to dismiss the complaint and since the Government objects to the Order's failure to apply the fugitive disentitlement doctrine, the Court considers these matters de novo.

II. Analysis

A. The fugitive disentitlement doctrine applies

"Courts invested with the judicial power of the United States have certain inherent authority to protect their proceedings and judgments in the course of discharging their traditional responsibilities." Degen v. United States, 517 U.S. 820, 823, 116 S.Ct. 1777, 135 L.Ed.2d 102 (1996) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43–46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) ). To that end, the fugitive disentitlement doctrine is "an ‘equitable doctrine’ that may be applied at court discretion" barring fugitives from seeking judicial relief. Hanson v. Phillips, 442 F.3d 789, 795 (2d Cir.2006) (citation omitted).³

While the "paradigmatic object of the doctrine is the convicted criminal who flees while his appeal is pending," Gao v. Gonzales, 481 F.3d 173, 175 (2d Cir.2007) (internal quotation marks and citation omitted), it applies to defendants that evade the authority of the justice system at any stage of the criminal process. See, e.g., United States v. Buck, No. 13 Cr. 282(VM), 2015 WL 195872 (S.D.N.Y. Jan. 9, 2015) (denying the defendant's request for a bail hearing because he was a fugitive). When determining if the doctrine applies, the Court must consider the threshold question of whether the defendant is a "fugitive." Then, the Court must weigh the following four factors: (1) whether a decision on the merits would be enforceable; (2) whether the defendant is flouting the judicial process; (3) whether a decision on the merits would encourage similar flights from justice; and (4) whether the defendant's evasion prejudices the Government. See Empire Blue Cross and Blue Shield v. Finkelstein, 111 F.3d 278, 280 (2d Cir.1997).

The Government argues that Darin is a fugitive because he failed to surrender pursuant to the Government's arrest warrant, dated December 12, 2012. The Government also argues that the doctrine's four factors require disentitlement. Darin argues that since he never fled from the United States, he is not a fugitive. And even if he were a fugitive, Darin argues that the doctrine's four factors weigh against disentitlement. Magistrate Judge Francis agreed with Darin, concluding that because the four factors weighed against disentitlement, he need not reach the "thorny" question of whether Darin is a fugitive. Order 9–11. Considering the matter de novo, the Court rules that Darin is a fugitive and that, upon a full consideration of the four factors, the fugitive disentitlement doctrine applies.

(i) Darin is a fugitive

Under the common law, a "fugitive" was defined as one who "flees or escapes" from custody. BLACK'S LAW DICTIONARY (10th ed.2014). Indeed, the quintessential image of a fugitive is fresh in the public mind in light of the recent prison break at the Clinton Correctional Facility in Dannemora, New York, and the subsequent 22–day manhunt for the two fugitives.

But defendants need not affirmatively flee to be labeled fugitives. In re Grand Jury Subpoenas dated March 9, 2001,

179 F.Supp.2d 270, 287 (S.D.N.Y.2001) ("[A] person can be a fugitive even when he does not ‘flee’ but is simply found outside the jurisdiction" (internal quotation marks and citation omitted)). Rather, defendants "constructively flee" when they were present in the jurisdiction at the time of the alleged crime, they subsequently leave the jurisdiction, and they decide not to return upon learning they are wanted by the authorities. See Buck, 2015 WL 195872, at *2 ("The concept of ‘constructive flight’ has been clearly adopted in the Second Circuit and applies where a defendant evades prosecution by remaining outside of the Court's jurisdiction after learning of the charges against him.").

The connection between "flight" and "fugitive status" is best understood when one considers that most federal crimes are committed by defendants who are physically located in the United States. Hence, defendants flee the jurisdiction either before, during, or after the prosecution commences, becoming fugitives. But a limited, though still significant, number of crimes can be committed by defendants who never set foot in the United States. For example, a defendant can conspire to commit wire fraud—as the Government alleges Darin did here—based entirely on actions taken abroad that use United States wires. Defendants who have allegedly violated United States law from afar neither have the capacity nor incentive to flee the United States. Are such defendants not appropriately classified as fugitives, simply because they allegedly committed their crimes remotely?

Consider the following hypothetical example: A defendant works at a bank in New York and allegedly conspires to manipulate financial data using United States wires. The Government files a criminal complaint alleging a conspiracy to violate Section 1343 and obtains an arrest warrant. The Government fails to arrest the defendant because he flees the jurisdiction. Certainly, the defendant is a fugitive.

Now consider the Government's allegations against Darin: Darin worked at a bank in Switzerland and allegedly conspired to manipulate the LIBOR using United States wires. The Government filed a criminal complaint alleging a conspiracy to violate Section 1343 and obtained an arrest warrant. The Government failed to arrest Darin because he remains in Switzerland, a nation...