United States v. Johnson, CRIMINAL ACTION NO. 14-238 SECTION "B"(4)

• Court: United States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)
• Parties: UNITED STATES OF AMERICA v. RUFUS JOHNSON, ET AL.
• Docket Number: CRIMINAL ACTION NO. 14-238 SECTION "B"(4)
• Decision Date: 08 March 2017

UNITED STATES OF AMERICA
v.
RUFUS JOHNSON, ET AL.

CRIMINAL ACTION NO. 14-238 SECTION "B"(4)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

March 8, 2017

ORDER AND REASONS

Before the Court are four motions. First, Defendants Rufus and James Johnson filed a "Motion to Dismiss Count 1." Rec. Doc. 199. The Government filed a response. Rec. Doc. 219. Second, Defendant Rufus Johnson filed a "Motion to Dismiss Counts 2 and 3 of the Indictment." Rec. Doc. 233. The Government filed a response (Rec. Doc. 242) and Defendant Rufus Johnson filed a reply memorandum (Rec. Doc. 245). Third, Defendant Rufus Johnson filed a "Motion to Dismiss Counts 1, 2, 3, and 4." Rec. Doc. 257. The Government timely filed a response. Rec. Doc. 261. Finally, Defendant Rufus Johnson also filed a "Motion to Dismiss Counts, 5, 6, and 7 because they are Multiplicitous." Rec. Doc. 198. Again, the Government filed a response. Rec. Doc. 218. Oral arguments on these motions were heard on January 4, 2017 (see Rec. Doc. 266) and post-hearing memoranda were filed by Defendant Rufus Johnson (Rec. Doc. 267), Defendant James Johnson (Rec. Doc. 268) and the Government (Rec. Doc. 269).

For the reasons discussed below,

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IT IS ORDERED that the motion to dismiss Count 1 (Rec. Doc. 199) is DENIED.

IT IS FURTHER ORDERED that the motion to dismiss Counts 2 and 3 (Rec. Doc. 233) is DENIED.

IT IS FURTHER ORDERED that the motion to dismiss Counts 1, 2, 3, and 4 (Rec. Doc. 257) is DENIED.

IT IS FURTHER ORDERED that the motion to dismiss Counts 5, 6, and 7 (Rec. Doc. 198) is GRANTED IN PART.

IT IS FURTHER ORDERED that the motion to disqualify counsel (Rec. Doc. 200) is DISMISSED AS MOOT.

I. MOTION TO DISMISS COUNT 1 (REC. DOC. 199)

Count 1 of the indictment alleges that Defendants conspired to commit mail, wire, and honest services fraud in violation of 18 U.S.C. § 1349. Rec. Doc. 8 at 33.

A. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The indictment alleges a complex conspiracy to fraudulently obtain money in exchange for facilitating the release of inmates from Orleans Parish Prison. Rec. Doc. 8 at 20. Specifically, Defendants Rufus Johnson, James Johnson, Perry Becnel, Josephine Spellman, and other co-conspirators are accused of operating a bail bond business in New Orleans that "used various means, permeated by fraud, in order to obtain inmate releases for customers, including executing commercial surety bail bond contracts; illegally requesting for-profit recognizance releases

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from public officials; and bribing public employees to release inmates and disclose confidential law enforcement information." Id. at 9.

1. Bail Bond Scheme

To solicit and negotiate bail bonds in this state, a person must obtain a Louisiana bail producer license, issued by the Louisiana Department of Insurance, and an appointment from an insurance company to sign powers of attorney. See LA. REV. STAT. ANN. § 22:1556(A). The indictment alleges that Defendant Rufus Johnson did not have a license or an appointment, as required by Louisiana law. Rec. Doc. 8 at 22. Instead, he purportedly hired employees who did possess the necessary qualifications, or required employees to acquire such qualifications, in order to operate his bail bond business under their licenses and sign their names to documents. Id.

The indictment further alleges that Insurance Companies A and B were Florida companies authorized by the Louisiana Department of Insurance to act as commercial sureties in bail bond contracts. Rec. Doc. 8 at 9-11. Both companies used commercial carriers to send and receive powers of attorney with local bail bondsmen. Id. The Government also alleges that Defendant James Johnson, who was (1) an attorney, (2) a Louisiana licensed bail bondsman from October 2000 to approximately January 2010, and (3) an appointed bail agent for Insurance Company A from August 1, 2003 to

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approximately February 2010, appointed several sub-agents who allowed Defendant Rufus Johnson to use their licenses for the conspiracy. Id. at 12, 14-5.

According to the indictment, commercial bail bonds at Criminal District Court were processed through the Magistrate Clerk's Office. Rec. Doc 8 at 7. A bond clerk in that office would prepare a typed bail bond form at the request of a bail bondsman. Id. This form included the name of the inmate, his or her criminal charge(s), the bail amount, and the name of the insurance company acting as surety. Id. The bail bondsman was required to present an executed power of attorney that authorized him or her to sign bail bonds on the insurance company's behalf. Id. Then the bondsman would sign the bail bond form in the presence of the bond clerk, who would also sign the bond to certify that he or she witnessed the bondsman signing and that it was indeed the named bondsman who signed. Id. From there, the bondsman would take the bail bond and the insurance power of attorney to the "bond window" at the prison. Id. at 8. Prior to being released, the inmate was required to sign the bail bond as the principal obligor of the bond. Id. Upon his or her release, the executed bail bond and insurance power of attorney became a part of the defendant's official court record for the criminal case and was entered into the Sheriff's computerized system. Id. The bondsman was also required to send

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copies of the executed powers of attorney back to the insurance companies through the U.S. mail or common carrier. Id. at 22.

Defendant Rufus Johnson is alleged to have operated a bail bond business that used various names, without a proper license, from a building at 538 South Broad Street in New Orleans from "sometime in 2000 and continuing through in or around September 2014." Rec. Doc. 8 at 11. He is accused of having signed bail bonds under his employees' names, licenses, and insurance appointments. Id. at 14-16.

2. Honest Services Scheme

As part of the conspiracy, Defendant Rufus Johnson also allegedly bribed public officials within the Magistrate Clerk's Office in exchange for (1) "obtaining bail bonds that had been pre-signed and pre-certified by a bond clerk" and (2) "delivery of unexecuted bail bonds, court documents, and information." Rec. Doc. 8 at 17-19. Purportedly, these public officials were also bribed to obtain released on his or her own recognizance ("R.O.R.") bonds, change inmates' bail status to either lower the set bail amount or change to an R.O.R., or to forge and fabricate official documents indicating that a judge had ordered an inmate's R.O.R.¹

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Id. at 20-33. Additionally, Defendants are accused of bribing these public officials in exchange for "obtaining confidential, official-use law enforcement information from limited access computer databases." Id. at 21.

3. Procedural History

Defendants previously moved to dismiss Count 1. See Rec. Docs. 116, 143, 154. In the first motion to dismiss, Defendant James Johnson argued that Count 1(a), the mail fraud scheme, "fails to allege that the defendants had the specific intent to obtain cash, premium payments or insurance powers of attorney by fraud" and therefore should be dismissed. Rec. Doc. 116-1 at 2. The motion was denied by Judge Berrigan on December 10, 2015. Rec. Doc. 130. Thereafter, Defendant Rufus Johnson moved to dismiss Count 1(a) because the mailings referred to in the indictment were "not sufficiently closely related" to the alleged scheme to bring Defendant's conduct within the confines of 18 U.S.C. § 1341. Rec. Doc. 143-1 at 2. He also moved to dismiss Count 1(b), the honest services fraud scheme, because (1) the indictment failed to allege that he used interstate commercial carriers or the U.S. Postal Service in furtherance of the scheme and (2) the actions described in the indictment did not violate independent state laws. Rec. Doc. 154. This Court denied both motions on March 11, 2016. Rec. Doc. 168.

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B. THE PARTIES' CONTENTIONS

First, Defendants Rufus and James Johnson argue that Count 1 should be dismissed because it does not allege a scheme to defraud a victim of anything of value, as required by Cleveland v. United States, 531 U.S. 12 (2000). Rec. Doc. 199 at 1. As to the bail bond scheme, Defendants contend that "it cannot be said that [] any person or entity was deprived of money or property, as each received precisely what he bargained for: the inmate was released from prison, and the surety company received its portion of the premium payments." Rec. Doc. 199-1 at 3-4. As to the honest services scheme, Defendants admit that the citizens of New Orleans are identified as the victims and that they were deprived of honest services, but they argue that no misrepresentation was made. Id. at 5. "[E]ach of the licensed bondsmen gave permission to the unlicensed bondsman, e.g., Rufus Johnson, to sign the bond . . . [and then] the true signatory, Rufus Johnson, signed the bond before the clerk, and there was no misrepresentation to the court as to who was actually signing the bond." Id. Finally, Defendants assert that "it is impossible to tell what mailing, if any, was used to further the [honest services scheme]." Id. The Government suggests that these arguments were already made by Defendants and rejected by the Court. Rec. Doc. 219 at 3, 5.

In his post-hearing memorandum, Defendant James Johnson reiterates that the indictment fails to allege a victim of the

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conspiracy. Rec. Doc. 268 at 1. According to him, if the victim is supposed to be the insurance companies, then any injury suffered is too "intangible or attenuated for the alleged behavior to reach the threshold of fraud." Id. at 7 (citing United States v. Regent Office Supply Co., 421 F.2d 1174 (2d Cir. 1970); United States v. Takhalov, 827 F.3d 1307 (11th Cir.), as revised (Oct. 3, 2016), opinion modified on denial of reh'g, 838 F.3d 1168 (11th Cir. 2016)). In response, the Government maintains that the indictment "alleged that the conspiracy constituted a violation of the public's right of honest services and,...