United States v. Johnson
| Docket Number | 21-cr-428 (ER) |
| Decision Date | 31 August 2023 |
| Parties | UNITED STATES, Plaintiff, v. ROBERT JEFFREY JOHNSON also known as JEFF JOHNSON, ROSS BALDWIN, and KATHLEEN HOOK, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Defendants Robert Jeffrey Johnson, Kathleen Hook, and Ross Baldwin[1] were charged in a five-count indictment with two counts of conspiracy to commit wire fraud, two counts of wire fraud, and one count of providing false statements to law enforcement.[2] Doc. 2.
Before the Court are the parties' pretrial motions. The Defendants jointly move to: (1) suppress the search and seizure of their email records, Doc. 65; (2) dismiss Counts One through Four of the indictment, Docs. 66, 67; (3) sever Doc. 72; (4) offer testimony of a witness located in France Andre Cardoso, via live closed-circuit television during trial, or via deposition, Doc. 90; (5) and exclude any evidence of Johnson's prior conviction, Doc. 85. The Defendants also move for an order requiring witnesses to comply with subpoenas duces tecum, Doc. 83, and Hook moves separately to suppress statements and documentary evidence, Doc. 64. The Government moves in limine to admit evidence of Johnson's prior conviction and preclude the cross-examination of a Government witness on particular subjects. Doc. 89.
For the reasons set forth below, the Defendants' motion to dismiss Counts Two and Four of the indictment is dismissed as moot. Furthermore, their motions to suppress evidence and to dismiss Counts One and Three of the indictment are DENIED; their motions for severance, and to offer the testimony of a foreign witness by alternative means are DENIED; and their motion to exclude Johnson's prior conviction is also DENIED. The Court defers judgment on the Government's remaining motion in limine and the Defendants' motion for an order requiring compliance with their subpoenas duces tecum.
The Government alleges that Johnson, along with his co-defendants Kathleen Hook[4] and Ross Baldwin, conspired to defraud investors in connection with a precious metals leasing program known as the “Silver Lease Program” between 2014 and January 2021. Doc. 2 ¶¶ 1, 2. An investor could participate in the Silver Lease Program in one of two ways: he could either (1) pay funds to the operators of the Program in order to purchase silver that the investor then leased to the operators of the Program, in return for a fixed monthly dividend payment, or (2) provide silver that he already owned in order to lease that silver to the operators of the Program, in return for a fixed monthly dividend payment. Id. ¶ 2.
According to the Government, the Defendants misled investors about the Silver Lease Program in a number of ways. First, they represented to investors that they owned a particular quantity of silver that was securely stored by Precious Commodities Inc.[5] (“PCI”) in a locked storage facility in Florida; however, in truth, PCI did not have storage units at the Florida facility. Id. ¶ 3. Additionally, investors provided millions of dollars to purchase silver through the Program, id. ¶ 4, but a large portion of the funds were misappropriated by the Defendants for personal expenses and to fund other unrelated business ventures, id.
In the spring of 2019, PCI stopped making monthly dividend payments to a majority of Program investors. Id. ¶ 5. Many investors made repeated demands for the return of their money or silver, to no avail. Id. The Government alleges that approximately 60 investors were defrauded of at least approximately $8 million as a result of the scheme. Id. ¶ 6.
The indictment states that Johnson[6] “orchestrated the Silver Lease Program scheme to defraud [investors]” as described in the indictment, including by installing associates and family members as officers of PCI and an entity called NCB Wholesale Co. (“NCBW”), and by providing direction to these individuals regarding the operation of the Silver Lease Program. Id. ¶ 7.
Hook was affiliated with NCB Wholesale. Through that entity, silver was secured from investors on behalf of the Silver Lease Program. Id. ¶ 9. Hook participated in the day-to-day operations of the Program, and she was also the signatory on the bank accounts of NCB Wholesale. Id. She directly diverted investments to, among other things, fund unrelated business ventures and pay for her own personal expenses, as well as the personal expenses of Johnson and his wife Carrie Johnson, Hook's daughter. Id.
Baldwin owned and operated the entity National Coin Broker, Inc. (“NCB”), and directly solicited potential investors in the Silver Lease Program. Id. ¶ 8. According to the Government, Baldwin “established and maintained websites where he directed potential investors that described the Silver Lease Program.” Id. ¶ 11. Baldwin also solicited investors by telephone and in-person, including at trade shows. Id. According to the Government, Baldwin made numerous material misrepresentations to induce investors to participate in the program. Id.
As relevant here, law enforcement officers searched and seized evidence related to the Silver Lease Program pursuant to two sets of search warrants: (1) a Florida state court warrant permitting the Fort Lauderdale Police Department to search a U.S. Postal Service Priority Mail shipping box addressed to “Precious Commodities,” Doc. 64-1; and (2) federal warrants permitting the Federal Bureau of Investigation (“FBI”) to obtain and search the records[7] of the email account jefjohnsn@aol.com (“Johnson email address”) and khook1061@gmail.com (“Hook email address”), among other email addresses, Doc. 65-2; see also Doc. 65-1.
In support of the application for the state court warrant, Fort Lauderdale Police Department (“FLPD”) detective Jesse Gossman stated that Precious Commodities was involved in an organized scheme to defraud the public, and the shipping box to be searched contained two weeks-worth of mail intended for it. Doc. 64-1 at 2-3. Det. Gossman identified two victims as well as the individuals who had provided information about the contents of the shipping box. Id. Specifically, Det. Gossman stated that after serving a subpoena on Carr Workplaces, a virtual office space provider, the police obtained records showing that Precious Commodities had listed a specific address, 420 Lincoln Road, Suite 402, Miami Beach, for mail forwarding. Id. at 2. The general manager of Carr Workplaces advised that Precious Commodities was behind on rent and had not come by to pick up its mail, so she placed the mail in a USPS box and sent it to the Miami Beach address. Id.
Det. Gossman then went to the Miami Beach address, accompanied by another FLPD officer, on November 14, 2019, observed that the address belonged to “American Construction and Engineering,” and saw a business card for Carrie Johnson, Johnson's wife. Id. at 3. At that point, the officers entered the building and encountered Kathleen Hook. Id. The officers spoke with Hook,[8] who confirmed that the Johnsons maintained offices at the address and consented to turning the shipping box-which was stored beneath her desk-over to the FLPD. Id. During the questioning, Hook stated, in substance and in part, that she did not work for PCI and had only been involved in preparing its taxes, and she also allowed the officers to view and take a number of PCI's tax documents. Id.; see also Doc. 76 at 35. Hook further told the police that she was unsure why the shipping box had been forwarded to her.[9] Doc. 64-1 at 3.
The court issued the warrant allowing the FLPD to search the shipping box. Id. at 5-6.
In support of the application for the federal warrants, FBI Special Agent Julie Amato submitted a written affidavit providing background regarding the Silver Lease Program and the Defendants' participation therein on May 26, 2020. Doc. 65-1 ¶¶ 1-83; id. at 50. She indicated that customers of the Program were told that the silver they leased to PCI was fully insured, and that it was stored in a “vault” in the Florida storage facility, referred to as the “Fort Lauderdale RoboVault Facility.” Id. ¶¶ 23, 24. During the course of her investigation, however, Agent Amato learned that these representations were false; after reviewing records from the Florida storage facility, it became clear that the silver was not being stored there, and that the facility did not “have any vaults” that corresponded with the representations that had been made to investors. Id. ¶¶ 24, 25(a). Although family members of Johnson's rented several storage units in the facility during periods between 2013 and 2018, Agent Amato's investigation revealed that “these units were far too small to accommodate even remotely close to the full quantity of silver that customers were purportedly leasing to PCI in connection with the Silver Lease Program.” Id. ¶ 25(c). Notably, neither Johnson nor others rented any storage units “during the time period when customers were entering into Silver Lease Program agreements in which they were informed their purported silver was being stored in a specific unit at the Fort Lauderdale RoboVault Facility.” Id. ¶ 26(g).
In regard to insurance coverage, Agent Amato indicated that Johnson, Baldwin, and others applied for and obtained insurance policies for the silver “based on false representations.” Id. ¶ 30. Among other things, the applications represented that the precious metals that PCI sought to insure were being stored at the Florida storage facility. Id. ¶¶ 31(e), 33.
Agent Amato went on to provide context about the Silver Lease Program's failure to issue dividend payments. Id. ¶ 39. Sh...
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