United States v. Nagle
| Decision Date | 26 July 2013 |
| Docket Number | Crim. No. 1:09-CR-384-01 |
| Parties | UNITED STATES OF AMERICA v. JOSEPH W. NAGLE |
| Court | U.S. District Court — Middle District of Pennsylvania |
MEMORANDUM
Following a four-week criminal trial, Defendant, Joseph W. Nagle, was convicted by a jury in the United States District Court for the Middle District of Pennsylvania of various crimes related to his involvement in multiple federally funded highway construction products. The 26 counts of which Defendant was found guilty included several counts of wire fraud, in violation of 18 U.S.C. § 1343, mail fraud, in violation of 18 U.S.C. § 1341, and engaging in unlawful monetary transactions, in violation of 18 U.S.C. § 1957. The jury also found that Defendant knowingly participated in a conspiracy to commit these acts in order to maximize productivity and profits for the company of which he was president, in violation of 18 U.S.C. §§ 371 and 1956(h). Specifically, Defendant was found to have participated in an elaborate scheme in which a certified disadvantaged business enterprise was improperly used as a "pass-through" to satisfy the disadvantaged business enterprise requirements on certain federally funded highway projects.
Presently before the court is Defendant's post-trial motion for judgment of acquittal notwithstanding the verdict pursuant to Federal Rule of Criminal Procedure 29, or in the alternative, motion for a new trial pursuant to Federal Rule of Criminal Procedure 33. (See Docs. 222, 232, 239 & 256.) In his motion and briefs in support thereof, Defendant raises a litany of issues relating to the sufficiency and weight of the evidence, the Government's actions during trial and pre-trial discovery,this court's handling of the trial itself, and the propriety of certain jury instructions. The Government has opposed the motion in all respects. (See Docs. 226, 236, 242 & 257.) The court has considered the submissions of both parties and post-trial evidence submitted in support of Defendant's numerous allegations of prosecutorial misconduct. For the reasons that follow, Defendant's motion will be denied in its entirety.
Due to the breadth of challenges in Defendant's motion, the court will set forth portions of the record pertinent to the issues raised.
On November 19, 2009, a federal grand jury sitting in the Middle District of Pennsylvania indicted Defendant and Ernest G. Fink ("Fink") on 32 counts, consisting of one count of conspiracy to defraud the United States Department of Transportation in the implementation, execution, and administration of its Disadvantaged Business Enterprise ("DBE") program and conspiracy to commit wire and mail fraud, and one count of conspiracy to commit unlawful monetary transactions. (Doc. 1.) The indictment also charged the defendants with committing, or aiding and abetting the commission of, 28 substantive violations of the aforementioned laws, as well as two asset forfeiture counts. (Id.) Both Defendant and Fink entered not guilty pleas to all counts. (See Docs. 11 & 12.)
On April 4, 2010, Defendant filed a motion to suppress,1 which sought to exclude electronic evidence obtained as a result of the search of the companies' servers. (Doc. 41.) Following a hearing on the issue, the court denied Defendant's motion, finding that Defendant lacked standing to challenge the search because he did not have a personal expectation of privacy in the content of the seized electronic information. (Doc. 89.)
On July 30, 2010, Fink entered into a plea agreement with the Government, in which he agreed to plead guilty to Count One of the indictment, charging conspiracy to defraud the United States Department of Transportation in the implementation of its DBE program and conspiracy to commit mail and wire fraud. (Doc. 77.) Fink's plea agreement did not require Fink to be a cooperating witness in the Government's prosecution of Defendant. (Id.) On September 20, 2010, Defendant filed a motion requesting the court to compel Fink's compliance with a trial subpoena. (Doc. 94.) In support of his motion, Defendant argued that Fink's testimony would be exculpatory and essential to his defense, namely that Defendant was systematically excluded from the day-to-day operations at SPI, which would demonstrate that Defendant did not join the ongoing conspiracy to commit DBE fraud or mail or wire fraud when he returned to SPI in 2004. (See id.) After considering the potentially exculpatory evidence Fink could provide, the courtgranted Fink judicial immunity for his testimony. (Doc. 120.) The matter was stayed pending the Government's interlocutory appeal of the court's ruling. (Doc. 125.) The Third Circuit affirmed this court's grant of judicial immunity (Docs. 140 & 141), and Fink testified at trial.
On October 4, 2010, Defendant filed a motion which sought to exclude evidence of Defendant's earnings and assets. (Doc. 119.) The motion focused on the exclusion of seventeen exhibits, which included, inter alia, Defendant's tax returns, the agreement of sale of SPI to Northeast Prestressed Products, and records of leased vehicles, which included the make and model of vehicles leased by SPI for Defendant's use. (See id.) In support of his motion, Defendant argued that the financial evidence was irrelevant and, if relevant, the documents' probative value was substantially outweighed by the potential for prejudice. (See id.) Regarding the tax records, Defendant argued that, because SPI was a Subchapter S corporation, the tax returns were misleading because he actually received only a portion of the income during the relevant time frame because the profits of SPI, though distributed and taxed, were reinvested by the company.2 (See id.) Regarding the sales agreement, which reflected that SPI was sold to Northeast Prestressed Products for $9.25 million, Defendant argued that the evidence was misleading because more than $7 million in debt was paid off with the proceeds of sale, and that Defendant's shareof the proceeds was considerably less than the sales price indicated.3 (See id.) Regarding SPI's records related to the leased vehicles, which indicated that SPI had leased a luxury vehicle for Defendant's use, Defendant argued that the leases were highly prejudicial and served virtually no evidentiary value.4 (See id.) On October 6, 2012, the court sustained Defendant's objection related to Government Exhibit 85.11, to the extent that the exhibit indicated the make and model of the vehicle leased for Defendant by SPI, but denied the motion in all other respects. (Doc. 126.) The permitted portions of the financial evidence were introduced at trial.
Trial began on March 12, 2012. The Government called 35 witnesses-many of them former employees of SPI. Defendant moved for a judgment of acquittal at the close of the Government's case on March 29, 2012 (see Doc. 175),5 which the court denied in an order dated March 30, 2012. (Doc. 184.) Defendantpresented testimony from four witnesses, including his own. Following these proceedings, and after less than two days of deliberation,6 the jury convicted Defendant of nearly all charges levied against him.7
Following the jury's verdict, Defendant filed the instant post-trial brief raising a multitude of challenges to his convictions, the Prosecutor's conduct both pre-trial and during trial, and this court's handling of the case. In his initial brief (Doc. 222), Defendant argued that: (1) the Government presented insufficient evidence to sustain the convictions, namely that the Government failed to prove beyond a reasonable doubt that Defendant did not act in good faith, and the court should, therefore enter a judgment of acquittal notwithstanding the verdict; and (2) the court should vacate the jury's verdict and grant a new trial in the interests of justice. (See id.) In support of the latter argument, Defendant argued that: (a) the verdict was against the weight of the evidence; (b) the Government violated its Brady obligations; (c) the Prosecutor made improper and prejudicial closing arguments to the jury; (d) the court gave an erroneous jury instruction on willful blindness; (e) the court erroneously excluded an important defense witness; and (f) the court erroneously denied Defendant's pre-trial suppression motion and pre-trial motion to preclude evidence on Defendant's wealth. Lastly, Defendant argued he was entitled to judgment of acquittal on the money laundering convictions because: (a) the convictions fail as a matter of law under United States v. Santos, 553 U.S. 507 (2008); (b) each money laundering transaction merged with the mail and wire fraudconvictions; and (c) there was insufficient evidence to support the money laundering convictions. The court will discuss Defendant's challenges in turn.
The court will, by necessity, segregate its discussion in terms of the key pieces of evidence applicable to the issues identified above, but one should not miss the forest for the trees. The reasonableness of the jury's verdict is dependent upon viewing the evidence as a whole, and while Defendant argues the weakness of certain trees, the court concludes that, when viewing the totality of the evidence, a reasonable jury could find beyond a reasonable doubt that Defendant conspired to commit the crimes for which he was convicted.
Pursuant to regulations adopted by the Department of Transportation at the direction of Congress, a state that receives federal funds for highway construction projects must set an annual goal for participation in such projects by disadvantaged business enterprises. See 49 C.F.R. § 26.21. Prime contractors, in turn, must ensure that the subcontracts awarded in connection with a highway construction project meet the DBE participation goal for that project. A...
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