United States v. Kight, CASE NO. 1:16-cr-00099-AT-LTW

Decision Date16 March 2020
Docket NumberCASE NO. 1:16-cr-00099-AT-LTW
PartiesUNITED STATES OF AMERICA, v. BENNETT L. KIGHT, Defendant.
CourtU.S. District Court — Northern District of Georgia
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION1

This case is currently before the Court on Defendant Bennett L. Kight's Motion for Production of Grand Jury Transcripts (Doc. 34); Motion in Limine to Exclude the Opinions and Testimony of Robert Danforth (Doc 164); Motion to Dismiss Counts One and Two of His Superseding Indictment (Doc. 177); Motion to Dismiss Second Superseding Indictment (Doc. 196); and Renewed Motion in Limine to Exclude the Opinions and Testimony of Robert Danforth (Doc. 205). After careful consideration, the Court RECOMMENDS that Defendants' motions be DENIED (Docs. 34, 164, 177, 196, 205).

I. BACKGROUND

A grand jury returned an Indictment against Defendant Bennett L. Kight ("Defendant") on March 16, 2016, charging Defendant with one count of mail fraud. (Doc. 1). A Superseding Indictment on May 18, 2016, added a charge of bank fraud. (Doc. 15). A Second Superseding Indictment, dated May 7, 2019, is the current charging instrument. (Doc. 184). Defendant is charged with one count of mail fraud, in violation of 18 U.S.C. § 1341 (Count One), and one count of bank fraud, in violation of 18 U.S.C. §§ 1344 and 2 (Count Two). (Id.).

The Second Superseding Indictment contains the following allegations.2 As a lawyer, Defendant represented F.B. and members of F.B.'s family, and Defendant managed various trusts, assets, and investments for their benefit, including two trusts held for the benefit of F.B.'s children (the "Trusts"). (Doc. 1, ¶¶ 1, 2). Defendant is accused of misappropriating approximately $2 million in January 2006 through a real estate transaction wherein he purportedly sold his former home (the "Property") to the Trusts (the "January 2006 transaction"). (Id. ¶ 3). After obtaining $2 million from accounts owned or held for the benefit of the Trusts, Defendant used approximately $500,000 to pay off his mortgage. (Id. ¶ 4). Defendant created two limited liabilitycompanies to hold title for the benefit of the Trusts, but neither LLC received record title, and they were dissolved in 2008. (Id. ¶¶ 2-4).

In late 2009, Defendant contributed the Property to an LLC owned by him and his son, R.K. (Id. ¶ 6). Defendant represented to R.K. that his wife still held title to the Property and did not disclose to R.K. that he sold the Property to the Trusts back in 2006. (Id.). R.K. ultimately moved into the Property. (Id.). In December 2010, Defendant caused a deed to be prepared that misrepresented that the Property was transferred on July 28, 2005, from Defendant's wife, the record owner, to an LLC controlled by Defendant (the "Deed"). (Id.). The LLC receiving title was not involved in the purported sale of the Property to the Trusts in January 2006. (Id. ¶ 7). On March 21, 2011, Defendant caused the fraudulent deed to be publicly recorded with a file-stamped copy returned to him by U.S. mail. (Id. ¶ 8).

Defendant caused the Deed to be prepared and filed to conceal the 2006 transaction. (Id. ¶ 11). Defendant knew that the fraudulent deed would be used to obtain a mortgage loan for R.K., and Defendant directed his secretary to provide copies of the fraudulent deed while R.K. was in the process of getting a mortgage. (Id. ¶¶ 12-13). SunTrust Mortgage, Inc. approved R.K.'s mortgage loan based on publicly recorded deeds, including the fraudulent deed. (Id. ¶ 14). Around January 16, 2012, R.K. notified Defendant that his loan would close in a few days, and Defendant toldhim to go ahead with the closing. (Id. ¶ 15). Around January 18 and 23, 2012, R.K. obtained a mortgage loan from SunTrust Mortgage, Inc. and SunTrust Bank for $400,000. (Id. ¶ 16).

II. MOTION FOR PRODUCTION OF GRAND JURY TRANSCRIPTS

Defendant requests the production of grand jury transcripts "to see how the factual and legal errors contained within the indictment arrived there," which Defendant argues is necessary to demonstrate that he was prejudiced by the errors. (Doc. 34, at 1). According to Defendant, the grand jury could only have returned the indictment if the Government presented erroneous facts and law to the grand jury. (Id.). Defendant's first contention is that the indictment incorrectly accuses Defendant of misappropriating funds owned or held for the benefit of F.B. when the funds for the January 2006 transaction came from trusts created for the benefit of F.B.'s husband's lineal descendants. (Id. at 3-6). The Second Superseding Indictment renders this argument moot by clarifying that the $2 million was obtained from Trusts held for the benefit of F.B.'s children and their lineal descendants. (Doc. 184 ¶¶ 2, 3).

Defendant's next argument is that the indictment inaccurately describes the January 2006 transaction as Defendant selling the Property to F.B. (Doc. 34, at 6-8). Citing an attached document titled "Purchase Agreement," Defendant avers that the January 2006 transaction involved one LLC selling another LLC its member interestin a third LLC that owned the Property. (Id.). Defendant contends that information about the LLCs' contract was not presented to the grand jury, depriving the grand jury of accurate information. (Id. at 8). Further, Defendant states the facts do not support criminal fraud, and argues there is no evidence he did not intend to honor his obligations at the time of the January 2006 transaction. (Id. at 9). According to Defendant, he is entitled to the following information: (1) what facts the Government presented to the grand jury about the January 2006 transaction, and (2) when the Government believes Defendant intended not to perform the contract, and what the Government instructed the grand jury to that effect. (Id. at 10). Finally, Defendant argues the Government could not have instructed the grand jury on the applicable law on mail and bank fraud because the indictment fails to charge the crimes. (Id. at 10-12). Defendant seeks to view the legal instructions provided to the grand jury to evaluate whether they are accurate. (Id. at 12-13).

Disclosure of matters occurring before the grand jury is generally prohibited. Fed. R. Crim. P. 6(e); Douglas Oil Co. of Cal. v. Petrol Stops Nw., 441 U.S. 211, 218-19 (1979) ("We consistently have recognized that the proper functioning of our grand jury system depends upon the secrecy of grand jury proceedings."). The interest in grand jury secrecy is not absolute, and a party seeking disclosure of grand jury transcripts must demonstrate that the need for disclosure outweighs the need for andpublic interest in grand jury secrecy. United States v. Aisenberg, 358 F.3d 1327, 1348 (11th Cir. 2004). To pierce the secrecy of grand jury proceedings, a defendant must show "a compelling and particularized need" for disclosure. Id. at 1349. The district court exercises substantial discretion in deciding whether grand jury transcripts should be disclosed. Douglas Oil, 441 U.S. at 218.

In this case, Defendant has failed to show a compelling and particularized need that would justify the release of grand jury transcripts. As an initial matter, the District Court already determined that the Superseding Indictment alleged facts and circumstances that support the mail fraud and bank fraud charges. (Doc. 46). This Court agrees. The current charging instrument, the Second Superseding Indictment, only amended the identity of the victim, which does not justify reconsideration of the well-reasoned decision. An indictment is legally sufficient if it "'(1) presents the essential elements of the charged offense, (2) notifies the accused of the charges to be defended against, and (3) enables the accused to rely upon a judgment under the indictment as a bar against double jeopardy for any subsequent prosecution for the same offense.'" United States v. Masino, 869 F.3d 1301, 1306 (11th Cir. 2017) (quoting United States v. Lang, 732 F.3d 1246, 1247 (11th Cir. 2013)). The Second Superseding Indictment is facially valid, as it charges the language in the statute and provides sufficient factual detail. United States v. McNair, 605 F.3d 1152, 1186 (11thCir. 2010) ("It is well established in this Circuit that an indictment is sufficient if it tracks the language of the statute and provides a statement of facts that gives notice of the offense to the accused.").

The Second Superseding Indictment tracks the language of the mail fraud statute. Paragraph 9 is drafted in substantially the same language as the mail fraud statute. 18 U.S.C. § 1343 provides:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. . . .

18 U.S.C. § 1343. Paragraph 9 of the Second Superseding Indictment provides:

On or about March 21, 2011, in the Northern District of Georgia and elsewhere, the Defendant BENNETT L. KIGHT ("Kight") for the purpose of executing and attempting to execute the aforementioned scheme and artifice to defraud, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, and material omissions, with intent to defraud, did knowingly cause to be delivered by mail and by any private or commercial interstate carrier according to the direction thereon, a publicly recorded deed to 400 Glen Arden Place, Atlanta, Georgia, that Kight backdated and caused to be backdated to reflect a transfer of such property on or about July 28, 2005. All in violation of Title 18, United States Code, § 1341.

(Doc. 184, ¶ 9).

Likewise, Paragraph 17 of the...

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