United States v. Skelos

• Decision Date: 17 May 2018
• Docket Number: 15-CR-317 (KMW)
• Parties: UNITED STATES OF AMERICA, v. DEAN SKELOS and ADAM SKELOS, Defendants.
• Court: U.S. District Court — Southern District of New York

UNITED STATES OF AMERICA, v. DEAN SKELOS and ADAM SKELOS, Defendants.

15-CR-317 (KMW)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

May 17, 2018

OPINION & ORDER

KIMBA M. WOOD, United States District Judge:

The Government has charged Defendants Adam Skelos and Dean Skelos with extortion in violation of 18 U.S.C. §§ 1951-52, with honest services fraud in violation of 18 U.S.C. §§ 1343 and 1346, and with soliciting and accepting bribes and gratuities in violation of 18 U.S.C. § 666(a). Defendants have served subpoenas duces tecum on several non-parties, including the New York State Department of Financial Services ("DFS"), Administrators for the Professions, Inc. ("AFP"), Physicians Reciprocal Insurers ("PRI"), Anthony Bonomo, and Carl Bonomo (collectively, the "PRI Parties"). The PRI Parties and the Government have moved to quash these subpoenas. Defendants have also served subpoenas duces tecum on non-parties Charles Dorego, Glenwood Management Corp. ("Glenwood"), and Steven Swarzman (collectively, the "Glenwood Parties"). The Glenwood Parties and the Government have moved to quash these subpoenas.

For the reasons set forth below, the Court (i) GRANTS the Government's and the PRI Parties' motions to quash the subpoenas served on the PRI Parties, and (ii) partially GRANTS and partially DENIES the Government's and the Glenwood Parties' motions to quash the subpoenas served on the Glenwood Parties as follows: (1) Requests 1, 2, 3, and 5 to Dorego, as well as Request 1 to Glenwood, are NOT QUASHED, and Dorego and Glenwood shall produce responsive documents to the Court on or before June 13, 2018; (2) Request to Dorego 4 is QUASHED; (3) Request to Dorego 6 and Request to Glenwood 3 are NOT QUASHED, and on or before June 13, 2018, Dorego and Glenwood shall produce to Defendants and the Government any documents responsive to these requests that they have not already produced to the Government; (4) Request to Dorego 7 and Request to Glenwood 4 are NOT QUASHED, but are modified as discussed below, and Dorego and Glenwood shall produce responsive documents to Defendants and the Government on or before June 13, 2018; (5) Request to Glenwood 2 is QUASHED; and (6) Request to Swarzman 3 is QUASHED.

I. LEGAL STANDARD

Rule of Criminal Procedure 17(c)(2) permits the court to quash a subpoena "if compliance would be unreasonable or oppressive." Under United States v. Nixon, the party requesting the subpoena has the burden of showing "(1) that the documents are evidentiary and relevant; (2) that they are not otherwise procurable reasonably in advance of trial by exercise of due diligence; (3) that the party cannot properly prepare for trial without such production and inspection in advance of trial and that the failure to obtain such inspection may tend unreasonably to delay the trial; and (4) that the application is made in good faith and is not intended as a general 'fishing expedition.'" 418 U.S. 683, 699-700 (1974) (footnote omitted).

Although the Nixon Court did not decide whether this four-part test applies to subpoenas served on third-parties in particular, courts in the Second Circuit have almost unanimously applied Nixon to subpoenas served on third-parties. See, e.g., United States v. Pena, No. 15-CR-551 (AJN), 2016 WL 8735699 (S.D.N.Y. Feb. 12, 2016) (Nathan, J.) ("[T]he overwhelming majority of district courts in the Second Circuit have applied the Nixon analysis" to "defense subpoena requests to third parties."); United States v. Rivera, No. 13-CR-149 (KAM), 2015 WL 1540517, at *4 n.1 (E.D.N.Y. Apr. 7, 2015) ("This court agrees with the other district courts in the Second Circuit that the Nixon Standard governs third-party subpoenas issued by thedefense."). Only one decision—United States v. Tucker, 249 F.R.D. 58, 66 (S.D.N.Y. 2008) (Scheindlin, J.), as amended (Feb. 20, 2008)—has suggested applying a different standard, and that standard has generally been rejected. See United States v. Bergstein, 16-CR-746 (PKC), 2017 WL 6887596, at *4 (S.D.N.Y. Dec. 28, 2017) (Castel, J.) ("'[T]he overwhelming majority of district courts in the Second Circuit have [instead] applied the Nixon analysis to such requests' because the relaxed Tucker standard is not prevailing law of the Circuit.") (quoting Pena, 2016 WL 8735699, at *1); United States v. Barnes, 2008 WL 9359654, at *3 (S.D.N.Y. April 2, 2008) (Robinson, J.) ("Though the Tucker Court found this relaxed standard appropriate, it is not the prevailing law. Indeed, all district courts within the Second Circuit, aside from the Tucker court, have applied the Nixon analysis to third-party subpoenas issued by the defense.").

This Court applies the Nixon standard, pursuant to which a criminal subpoena should not be used as "a discovery device," but instead should be used only as "a mechanism for obtaining specific admissible evidence." Barnes, 2008 WL 9359654, at *4; accord United States v. Cherry, 876 F. Supp. 547, 552 (S.D.N.Y. 1995) (Haight, J.) ("Rule 17(c) is not a method of discovery in criminal cases.") The "materials [sought under Rule 17] must themselves be admissible" at trial; it is not enough that they "contain information which could be admissible." Cherry, 876 F. Supp. at 552. To that end, Rule 17(c) subpoenas cannot be used to obtain documents that would be excluded on hearsay grounds or would otherwise be "inadmissible as evidence at trial." United States v. Brown, No. 95 CR. 168 (AGS), 1995 WL 387698, at *10 (S.D.N.Y. June 30, 1995) (Schwartz, J.). Documents bearing on a witness's decision to "cooperate with the government" or any bias towards the defendant, however, can be proper subjects of a Rule 17(c) motion because those types of documents may themselves be admissible into evidence. United States v. Orena, 883 F. Supp. 849, 869 (E.D.N.Y. 1995); United States v. Carollo, No. 10 CR 654 HB, 2012 WL 1195194, at *2 (S.D.N.Y. Apr. 9, 2012) (Baer, J.)(holding that evidence of "bias or a motive on the part of [the witness] to cooperate with the government" is proper subject of Rule 17(c) subpoena). Similarly, documents containing prior statements of a witness that are inconsistent with that witness's testimony at trial can be admissible under Federal Rule of Evidence 613, and so can be the proper subject of a Rule 17(c) subpoena. United States v. Ferguson, No. 3:06-CR 137(CFD), 2007 WL 4577303, at *3 (D. Conn. Dec. 26, 2007) (holding that prior inconsistent statements of testifying witnesses are "properly within the scope of [a] Rule 17(c) subpoena").

Evidence showing a witness's motive to cooperate, showing bias, or containing prior inconsistent statements, however, does not become relevant until the witness testifies. For this reason, many courts have held that production of impeaching evidence pursuant to Rule 17(c) is not required until after the witness testifies. United States v. Seabrook, No. 16-CR-467, 2017 WL 4838311, at *2 (S.D.N.Y. Oct. 23, 2017) (Carter, J.) ("[D]espite the fact that it is a virtual certainty that [the witness] will testify in this matter, the weight of the authority in this Circuit favors production when the witness testifies."); United States v. Giampa, No. S 92 CR. 437 (PKL), 1992 WL 296440, at *4 (S.D.N.Y. Oct. 7, 1992) (Leisure, J.) (modifying subpoenas for impeachment materials "to make them returnable at the time when [the witness] testifies at trial"). To avoid delay in trial, courts sometimes require production of impeaching material to the court (but not to counsel), with the court reviewing these documents in camera and then disclosing any admissible documents only after the witness testifies. United States v. Cuthbertson, 630 F.2d 139, 145 (3d Cir. 1980) (affirming decision of district court requiring "pretrial production to the court" in order "to avoid unnecessary delay and disruption of the trial").

II. DISCUSSION

A. Subpoenas Served on PRI Parties

The PRI Parties and the Government have moved to quash subpoenas served on the PRI Parties. (ECF Nos. 258, 264, 268, 269.) These subpoenas demand production of between eight and thirteen categories of documents. (See Gov't PRI Mot.,¹ Exs. A-E.) In their opposition papers, however, Defendants have agreed to limit their demands "for the present purposes" to the following four categories of documents relating to the current DFS investigation of PRI:

(1) documents that PRI, AFP, and the Bonomos have produced to DFS,

(2) transcripts of the depositions conducted by DFS, including the exhibits to those depositions,

(3) the DFS "interrogatories" and the answers provided, and

(4) communications between DFS and the government.

(Defs.' PRI Opp'n,² at 8.)

Although these demands are narrower than those Defendants originally made in their subpoenas, they are still unreasonable under Rule 17(c) and Nixon because they are not sufficiently specific and request the production of documents that are either not admissible at trial or are obtainable through other means.³

1. Request 1

Defendants demand all "documents that PRI, AFP, and the Bonomos have produced toDFS" as part of DFS's investigation into PRI. (Defs.' PRI Opp'n, at 8.) According to Defendants, this DFS investigation "found that Bonomo cooked PRI's books 'and then tried to cover it up.'" (Id., at 1.) Defendants contend they are entitled to all of the documents that PRI, AFI, and the Bonomos produced to DFS because, inter alia, they may show that "the government's star witness, Anthony Bonomo, engaged in rampant fraud and other misconduct in his management of PRI." (Id.)

Although Defendants know that the documents they are seeking were produced by PRI, AFP, and the Bonomos as part of the DFS investigation, they do not know the scope of that investigation (or the volume of documents produced to DFS that are relevant to this case). Because Defendants do not know the universe of documents they are requesting, they cannot meet their burden of showing that these documents would be admissible at trial. See Brown, 1995 WL 387698, at *9....