United States v. Ryan
| Decision Date | 14 January 2022 |
| Docket Number | CRIMINAL ACTION NO. 20-65 |
| Citation | 580 F.Supp.3d 359 |
| Parties | UNITED STATES of America v. Ashton J. RYAN Jr., William J. Burnell, Robert Calloway, Frank J. Adolph, Fred V. Beebe |
| Court | U.S. District Court — Eastern District of Louisiana |
Matthew Richard Payne, Sharan E. Lieberman, Jeffrey Ryan McLaren, K. Paige O'Hale, Kevin G. Boitmann, Nicholas Dupuy Moses, Rachal Cox Cassagne, Assistant U.S. Attorneys, DOJ-USAO, New Orleans, LA, for United States of America.
Edward J. Castaing, Jr., Peter E. Castaing, Crull, Castaing & Lilly, New Orleans, LA, Deborah A. Pearce, New Orleans, LA, for Ashton J. Ryan, Jr.
Brian J. Capitelli, Ralph Capitelli, Tyffani A. Lauve, Capitelli & Wicker, New Orleans, LA, for William J. Burnell.
Michael William Magner, Alexander Breckinridge, Edward H. Bergin, Thomas C. Wicker, IV, Avery Bryce Pardee, Michael Joseph O'Brien, Jones Walker LLP, New Orleans, LA, Michelle S. Stratton, Dane C. Ball, Pro Hac Vice, Smyser Kaplan and Veselka, LLP, Houston, TX, Daniel J. Martin, Pro Hac Vice, Jones Walker LLP, Birmingham, AL, for Robert Calloway.
David Ichiro Courcelle, Scott C. Stansbury, Law Office of David I. Courcelle, LLC, Metairie, LA, for Frank J. Adolph.
Sara A. Johnson, Sara A. Johnson, Attorney at Law, New Orleans, LA, Ethan Atticus Balogh, Pro Hac Vice, Balogh & Co., APC, San Francisco, CA, for Fred V. Beebe.
SECTION "L"(4)
ORDER AND REASONS
Before the Court are three motions to dismiss the Second Superseding Indictment ("the Indictment") filed by several Defendants. R. Docs. 430-32. First, Defendant Robert Calloway has filed a "Motion to Dismiss the Second Superseding Indictment in Part." R. Doc. 430. Adopting this motion are co-Defendants William Burnell, R. Doc. 447, and Ashton Ryan, R. Doc. 450. Second, Defendant William Burnell has filed a "Motion to Consolidate and Dismiss Counts as Multiplicitous." R. Doc. 431. Also joining this motion are co-Defendants Robert Calloway, R. Doc. 448, and Fred Beebe, R. Doc. 455. Last, Ryan has submitted a "Motion to Dismiss Counts Based on Multiplicity and Other Grounds." R. Doc. 432. Calloway adopts this motion as his own. R. Doc. 448.1 The government has filed a single consolidated response opposing each of the three motions. R. Doc. 462. Defendants filed memoranda in reply. R. Doc. 468, 470, 472. Considering the briefs and oral arguments of counsel, the record, and the applicable law, the Court now issues this Order and Reasons.
This case arises from alleged fraudulent bank activity at First NBC Bank ("the Bank"), the failure of which cost the FDIC's deposit insurance fund approximately $996.9 million. On August 5, 2021, a 49-count Second Superseding Indictment was entered charging Defendants with conspiracy to commit bank fraud, bank fraud, and false entries in bank records. R. Doc. 318. In relevant part, the operative Indictment alleges that Defendants participated in a scheme to defraud the Bank and enrich themselves by lying on loan documents about the purposes of the loans, borrowers’ creditworthiness, the risk of loss the borrowers’ loans posed to the Bank, and the sources of repayment for the loans. R. Doc. 318. at 7.
Defendant Burnell's motion seeks to consolidate and dismiss counts in the Second Superseding Indictment as multiplicitous. R. Doc. 431. Burnell notes that the operative Indictment charges multiple counts of bank fraud for each of several loan relationships. He argues this is impermissible because each borrowing relationship concerns only a single alleged "scheme and artifice." Thus, according to Burnell, only a single count of bank fraud may be charged for each loan relationship. Burnell asserts that charging him in this way—isolating related loan packages with an individual borrower that together form part of a single, ongoing banking relationship in order to charge distinct counts of bank fraud—is multiplicitous and violates the Double Jeopardy Clause of the Fifth Amendment because it exposes him to the possibility of being sentenced multiple times for a single violation of the bank fraud statute. Id. ; R. Doc. 431-1 at 11. Burnell argues that the Court should consolidate the multiplicitous counts and dismiss any excess counts. Id. at 1-2.
In his motion, Defendant Ashton Ryan, like Burnell, argues that counts in the Second Superseding Indictment are multiplicitous in violation of the Double Jeopardy Clause and severely prejudice his right to a fair trial by "creat[ing] an exaggerated impression of criminality." R. Doc. 432 at 1. In the alternative, Ryan "moves the Court to require the government to elect one, from among the many, multiplicitous counts." R. Doc. 432 at 1.
Next, Defendant Calloway's motion argues that nearly all of the counts in the Indictment charging him with the offense of making False Entries in Bank Records in violation of 18 U.S.C. § 1005 —namely, counts 41, 43, 44, 47, and 48—must be dismissed. R. Doc. 430. First, Calloway contends that the government fails to state an offense where it charges non-factual, subjective statements of opinion as constituting "false entries" in bank records. R. Doc. 430-1 at 1. Second, Calloway contends that the challenged counts are duplicitous because they each charge two separate offenses: a false entry made by an affirmative misstatement and a false entry due to a material omission. Because duplicity raises serious concerns about jury unanimity, Calloway argues the false entries counts should be dismissed, or, alternatively, asks the Court to require the government to elect which theory—false entry due to an actual misstatement or due to a material omission—it will pursue as to each challenged false entry count.
In opposition, the government contends that the bank fraud count in the Second Superseding Indictment are not multiplicitous; that the false entries and material omissions charges are proper; and that any potential duplicity and unanimity issues can be cured by a jury instruction and therefore do not require dismissal. R. Doc. 462. Defendants each submitted memoranda in reply. R. Docs. 468, 470, 472.
Defendants Burnell and Ryan argue that a number of the bank fraud and false entries counts in the Second Superseding Indictment are multiplicitous and therefore must be dismissed. R. Doc. 431-32. "An indictment that charges a single offense in more than one count is multiplicitous." United States v. Hord , 6 F.3d 276, 280 (5th Cir. 1993). "The primary danger created by such an indictment is that the defendant may receive more than one sentence for a single offense, in violation of the double jeopardy clause." An additional risk attending multiplicity is that "an adverse psychological effect on the jury may result from the suggestion that several crimes have been committed." United States v. Smith , 591 F.2d 1105, 1108 (5th Cir. 1979). "The crux of any argument that convictions are multiplicitous is, of course, what constitutes the offense charged." Hord , 6 F.3d at 280.
The Court first discusses the multiplicity challenges to the bank fraud counts before addressing the false entries counts.
Defendants challenge as multiplicitous the substantive counts of bank fraud under 18 U.S.C. § 1344. That provision makes it a crime to "knowingly execute[ ], or attempt[ ] to execute, a scheme or artifice ... to defraud a financial institution." 18 U.S.C. § 1344. "[T]he bank fraud statute imposes punishment only for each execution of the scheme." United States v. Lemons , 941 F.2d 309, 318 (5th Cir. 1991) ; see also United States v. Harris , 79 F.3d 223, 232 (2d Cir. 1996) (). Importantly, "a single scheme can be executed a number of times, and a defendant may be charged in separate counts for each ‘execution’ of the scheme to defraud." United States v. De La Mata , 266 F.3d 1275, 1287 (11th Cir. 2001) ; see also Hord , 6 F.3d at 282 (). Thus, the multiplicity question in a bank fraud cause "is what constitutes ‘an execution of the scheme.’ " Lemons , 941 F.2d at 317 n.5.
Determining whether acts constitute separate executions of a scheme or are merely acts in furtherance of a scheme is a fact-dependent inquiry. United States v. Gallant , 537 F.3d 1202, 1226 (10th Cir. 2008). Courts consider multiple factors, including "the ultimate goal of the scheme, the nature of the scheme, the benefits intended, the interdependence of the acts, and the number of parties involved." De La Mata , 266 F.3d at 1288. Additionally, courts ask whether the acts "were chronologically and substantively independent from the overall scheme." Harris , 79 F.3d at 232. Other considerations are "the number of banks, the number of transactions, and the number of movements of money involved in the scheme." United States v. Brandon , 17 F.3d 409, 422 (1st Cir. 1994). The Fifth Circuit has specifically looked to whether the acts were so "integrally related" that "one could not have succeeded without the other." United States v. Heath , 970 F.2d 1397, 1402 (5th Cir. 1992).
"Each time an identifiable sum of money is obtained by a specific fraudulent transaction, there is likely to be a separate execution of the scheme to defraud." Gallant , 537 F.3d 1202 (quoting Brandon , 17 F.3d at 422 ). Thus, "each count of the Indictment involving a draw upon a line of credit would constitute a separate execution of the scheme and would be punishable as a separate crime." United States v. Burger , 964 F.2d 1065, 1074 (10th Cir. 1992). A defendant's "intent ... to use the money for a single purpose...
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