United States v. Khoury
| Decision Date | 02 July 2021 |
| Docket Number | Case No. 20-cr-10177-DJC |
| Parties | UNITED STATES OF AMERICA v. AMIN KHOURY |
| Court | U.S. District Court — District of Massachusetts |
Defendant Amin Khoury ("Khoury") has moved to dismiss Count I of the indictment against him. D. 33. For the reasons stated below, the Court DENIES the motion.
For consideration of a motion to dismiss an indictment, the Court presumes the allegations of an indictment to be true. United States v. Dunbar, 367 F. Supp. 2d 59, 60 (D. Mass. 2005); United States v. Bohai Trading Co., Inc., 45 F.3d 577, 578 n.1 (1st Cir. 1995). Accordingly, the Court summarizes the relevant facts based on the allegations in indictment, D. 1.
Georgetown University ("Georgetown") is a highly selective private university with athletic teams that compete in Division I. Id. ¶¶ 2, 6. Georgetown sets aside a specific number of admissions slots to each head coach of an athletic team for that coach's recruited student athletes ("Recruits"). Id. ¶ 7. Recruits have a substantially higher chance of being admitted than non-Recruits with similar grades and standardized test scores. Id. Georgetown expects Recruits to be contributing members of its athletic teams once enrolled. Id.
As alleged, in or about May 2014, Khoury agreed to pay Gordon Ernst ("Ernst"), then employed at Georgetown as the head men's and women's tennis coach, $200,000 in exchange for designating Khoury's daughter as a Georgetown tennis team ("Team") Recruit. Id. ¶¶ 4, 10(a). Ernst agreed to pay an unnamed tennis recruiter $10,000 to act as a middleman in the transaction between Ernst and Khoury, and Ernst understood that Khoury would also pay additional compensation to the tennis recruiter. Id. ¶ 10(b).
On or about July 21, 2014, Khoury emailed the director of college counseling at his daughter's high school that Ernst was "willing to energetically recruit" his daughter onto the Team. Id. ¶ 10(c). When Khoury's daughter later applied to Georgetown, on or about October 13, 2014, an accompanying letter of recommendation stated that she played number six singles and third doubles on her high school team, below the level of a typical Recruit. Id. ¶ 10(d). Several days later, Khoury reiterated to the high school director of college counseling that he was in touch with Ernst and that "[i]t's looking really good." Id. ¶ 10(e). Then, on or about October 19, 2014, Ernst emailed a Georgetown admissions officer and named Khoury's daughter as a Recruit, suggesting that the director of college counseling at her high school approached him, but not disclosing his prior agreement with Khoury to designate his daughter as a Recruit. Id. ¶ 10(f). Ernst later forwarded Khoury's daughter's grades and standardized test scores to the admissions officer. Id. ¶ 10(g). On or about November 15, 2014, Khoury texted Ernst to ask whether his daughter should participate in a Georgetown alumni interview. Id. ¶ 10(h). Ernst told Khoury that she should participate in the interview and suggested that she tell the interviewer she wanted to play on the Team. Id. On or about December 9, 2014, Georgetown sent Khoury's daughter a letter explaining that the admissions committee had conducted an initial review of her application at Ernst's requestand had rated her prospect of admission as "likely," which corresponds to a greater than 95 percent chance of later being admitted. Id. ¶ 10(i).
Khoury's daughter was accepted to Georgetown. Id. ¶ 10(j). In early May 2015, Khoury withdrew $200,000 in cash from a bank in Florida and flew to his home in Massachusetts where he met with the tennis recruiter and gave him the money: $180,000 for Ernst and $20,000 for the tennis recruiter. Id. ¶¶ 10(j-k). The tennis recruiter then met Ernst's spouse and gave her $170,000, keeping $10,000 for himself. Id. ¶ 10(l). After May 2015, Khoury communicated on several occasions with Ernst and the tennis recruiter about paying the remaining money that Khoury owed Ernst, and in July 2016, Khoury and Ernst made plans to meet for the additional payment. Id. ¶ 10(n-r).
Based on the allegations in the indictment, a grand jury has indicted Khoury for one count of conspiracy to commit mail fraud and honest services mail fraud and bribery concerning programs receiving federal funds in violation of 18 U.S.C. § 371 (Count I) and one count of bribery concerning programs receiving federal funds in violation of 18 U.S.C. § 666(a)(2) (Count II). D. 1. Khoury has now moved to dismiss Count I, the conspiracy to commit fraud count, of the indictment. D. 33. The Court heard oral argument on the motion and took the matter under advisement. D. 57.
For a mail or wire fraud charge, an indictment must allege that the defendant engaged in a scheme where the object was to deprive the victim of "money or property." See Kelly v. United States, ___ U.S. ___, 140 S. Ct. 1565, 1571 (2020) (citing McNally v. United States, 483 U.S. 350, 358 (1987); Cleveland v. United States, 531 U.S. 12, 26 (2000)). Khoury challenges two of thegovernment's theories alleged in Count I: the property theory of mail fraud and the honest services theory. See D. 34. First, Khoury argues that the Court should dismiss the government's property theory of mail fraud in Count I because 1) an admissions slot is not "property," 2) property loss was not an object of the scheme, and 3) the rule of lenity warrants dismissal due to ambiguity in the mail fraud statute. Id. Second, Khoury challenges the government's theory of honest services fraud, arguing that economic harm to Georgetown was not reasonably foreseeable. Id. The Court addresses each argument in turn.
Khoury contends that a college admissions slot is not "property" covered by the mail fraud statute. D. 34 at 18-28. Specifically, Khoury characterizes an admissions slot as educational services, not property, argues that an admissions slot has not been recognized by courts as a traditional form of property, and asserts that Georgetown's "right to control" its admissions process is not a property right. Id. The government asserts that Georgetown has tangible property interests in admissions slots because they are valuable and finite, and a property right to control who receives those slots. D. 41 at 9-16.
As an initial matter, the admissions slots here are property, not services. While the "mail fraud statute is limited to the protection of property rights, [] the concept of property 'is to be interpreted broadly.'" United States v. Dray, 901 F.2d 1132, 1142 (1st Cir. 1990) (quoting McNally, 483 U.S. at 356); see United States v. Rosen, 130 F.3d 5, 9 (1st Cir. 1997) (). An offer to attend Georgetown, alleged to be finite, includes not just the conferral of a degree or the provision of educational instruction, but also access to a host of other benefits that Georgetown has to offer, from its facilities to its network and reputation.Here, the indictment alleges both that Georgetown set aside a limited number of admissions slots for coaches to designate Recruits to take, and that Recruits have less stringent admissions criteria than non-Recruits. D. 1 ¶ 7. Thus, the slot at issue here has tangible value, not just from what it offers to prospective students, but also from the limited nature of it. See United States v. Sidoo, 468 F. Supp. 3d 428, 441-42 (D. Mass. 2020) (); United States v. Frost, 125 F.3d 346, 367 (6th Cir. 1997) ();1 United States v. Hedaithy, 392 F.3d 580, 596-97 (3d Cir. 2004) ().
The right to control one's property is a longstanding property right and has been recognized in the context of fraud schemes where the victim of the scheme is deprived of "information it would consider valuable in deciding how to use its assets" or "dispense with its property." United States v. Gatto, 986 F.3d 104, 114, 116-17 (2d Cir. 2021) (quoting United States v. Finazzo, 850 F.3d 94, 111 (2d Cir. 2017)); United States v. Carlo, 507 F.3d 799, 801-02 (2d Cir. 2007) (citing Carpenter v. United States, 484 U.S. 19, 25 (1987)) ( that "[w]hile the interests protected by the mail and wire fraud statutes do not generally extend to intangible rights . . . they do extend to all kinds of property interests, both tangible and intangible" and that "[s]ince a defining feature of most property is the right to control the asset in question, we have recognized that the property interests protected by the statutes include the interest of a victim in controlling his or her own assets"). In these cases, misrepresentations or non-disclosure of information must result in tangible economic harm, which can either be direct, "such as by increasing the price the victim paid for a good," or indirect, "such as by providing the victim with lower-quality goods than it otherwise could have received." Finazzo, 850 F.3d at 111. Here, the alleged scheme facilitated the withholding of valuable information from Georgetown—Khoury agreed to pay Ernst in exchange for Ernst designating his daughter as a Recruit—that may have caused Georgetown not to give Khoury's daughter an admissions slot (i.e.,...
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