United States v. Teman

Citation465 F.Supp.3d 277
Decision Date05 June 2020
Docket Number19-CR-696 (PAE)
Parties UNITED STATES of America, v. Ari TEMAN, Defendant.
CourtU.S. District Court — Southern District of New York

Jacob Gutwillig, Edward Arthur Imperatore, Kedar Sanjay Bhatia, United States Attorney's Office, New York, NY, for United States of America.

Joseph Andrew DiRuzzo, III, DiRuzzo & Company, Fort Lauderdale, FL, Justin Gelfand, Margulis Gelfand, LLC, Saint Louis, MO, for Defendant.


PAUL A. ENGELMAYER, District Judge:

This decision resolves post-trial motions filed by defendant Ari Teman.

Beginning January 22, 2020, the Court presided over Teman's jury trial. Teman was charged with two counts of bank fraud, in violation of 18 U.S.C. § 1344, and two of wire fraud, in violation of 18 U.S.C. § 1343. These charges alleged that Teman had created and deposited checks drawn on the accounts of his home-security company's customers, while falsely representing to the depositary and clearing banks that the customers had knowingly authorized those checks. The checks consisted of (1) two checks totaling $36,000 which Teman deposited in March 2019, and (2) 27 checks totaling $297,000 which Teman deposited between April and June 2019. On January 24, 2020, at the close of the Government's case, Trial Tr.1 at 692–99, and again on January 27, 2020, at the close of the defense case, id. at 938–39, Teman moved for a judgment of acquittal under Federal Rule of Criminal Procedure 29(a). The Court denied both motions. See id. at 702, 722–27, 939. On January 29, 2020, the jury returned its verdict, convicting Teman on all counts.

On February 26, 2020, Teman timely moved for a judgment of acquittal under Rule 29(c) or, in the alternative, for a new trial under Rule 33. Dkt. 111 ("Teman Mem."). In his Rule 29(c) motion, Teman argues that (1) the Court, through its jury instructions, and the Government, through its proof at trial, constructively amended the Indictment; (2) there was insufficient evidence that Teman made a material misrepresentation to a financial institution; (3) there was insufficient evidence that Teman acted with criminal intent; and (4) there was insufficient evidence of venue. In his Rule 33 motion, Teman incorporates these arguments and further contends that a new trial is warranted because (1) the Government violated the "rule of sequestration"; (2) the Court improperly excluded a proposed defense expert witness on "remotely created checks"; and (3) an alternate juror lied during voir dire. Teman also moves, under Federal Rule of Criminal Procedure 6(e)(3)(E)(i) and (ii), for disclosure of grand jury transcripts relating to his claim of a constructive amendment. Dkt. 120 ("Teman GJ Ltr.").

On April 9, 2020, while Teman's motions were being briefed, Teman filed a second Rule 33 motion, Dkt. 118 ("Teman Brady Mem."), in which he contends that the Government failed to disclose Brady and Jencks Act evidence to the defense.

For the reasons that follow, the Court denies all of Teman's post-trial motions.

I. Background

The Court assumes familiarity with the factual background of this case and the evidence adduced at trial. The discussion that follows presents only the evidence necessary to resolve the motions at hand.2

A. Teman's Fraud Scheme

Teman owned GateGuard, Inc. ("GateGuard"), a Florida company that produced and installed intercom devices for apartment buildings. See, e.g. , Trial Tr. at 278, 312–13. The evidence at trial centered on three of GateGuard's New York City-based customers or sets of customers of Teman's: (1) 518 West 204 LLC, managed by Coney Management; (2) 18 Mercer Equity Inc. ("18 Mercer"), managed by Crystal Real Estate Management; and (3) ABJ Milano LLC and ABJ Lenox LLC (together, "ABJ"), both managed by ABJ Properties LLC (collectively, the "Customers"). Each Customer had agreed to use GateGuard's services, including purchasing the company's intercom devices for use in their buildings, which generally were located in Manhattan or the Bronx. See id. at 310, 312–15 (518 West 204 LLC); id. at 415, 420, 434–36 (18 Mercer); id. at 486, 489–90 (ABJ).

Viewed in the light most favorable to the verdict, the evidence established that during the first half of 2019, Teman created, and deposited into accounts he controlled, multiple checks on each Customer's account—ostensibly to pay fees owed to GateGuard, but all without the Customers’ foreknowledge or authorization. See, e.g. , id. at 357–58, 362–63, 367 (518 West 204 LLC) (explaining that checks were not authorized); id. at 441, 474–75 (18 Mercer) (same); id. at 562–64, 567, 648–49 (ABJ) (same). The evidence further showed that, to create the illusion of customer assent, Teman had referred in written communications with each Customer at points during their dealings with GateGuard to "Terms and Conditions" that GateGuard had adopted governing customer relationships.3 See id. at 329–33, 385–87 (518 West 204 LLC); id. at 421–22 (18 Mercer); id. at 591 (ABJ); see also GX4 441 ("T&C"). GateGuard's Terms and Conditions contained within them, on page five, a hyperlink to GateGuard's "Payment Terms." See T&C at 5; DX 2 ("Payment Terms"). Buried within the Payment Terms, at least in a post-offense version introduced at trial,5 was a clause purporting to grant GateGuard the authority to withdraw funds from the Customers’ accounts to pay debts owed to GateGuard by the Customer. See Payment Terms at 5 ("You give us permission to write and sign checks with your checking and/or saving account(s) information to do a bank draw against your entity (or entities) for the amount it (or they) owe(s)."). However, representatives of each Customer testified that they had never seen the Payment Terms, had never discussed such terms with Teman, and had not granted GateGuard that authority, and would not have done so had they been given the opportunity. See Trial Tr. at 326–27, 332, 355–56, 361, 365 (518 West 204 LLC); id. at 427–30 (18 Mercer); id. at 497–98, 568–69 (ABJ).

The Customers further disputed owing GateGuard any money for the purported services and fees to which the outsized checks that Teman had fabricated and negotiated in March and April 2019 were based. See, e.g. , id. at 342, 360–61, 365 (518 West 204 LLC); id. at 434, 441 (18 Mercer); id. at 563, 649 (ABJ). These checks—totaling $51,000 in fees drawn on 518 West 204 LLC's account, $18,000 on 18 Mercer's, and $264,000 on ABJ's, see GX 201–05—far outstripped in value the few thousand dollars each Customer had paid for its GateGuard devices, see GX 413 at 3 (invoice for GateGuard purchase); GX 431 at 3 (same); GX 409A–409B (same).

As context for Teman's decision unilaterally to draw and deposit the 29 checks in 2019, the evidence showed that, during 2018, the Customers had each told Teman that they were going to cease using GateGuard devices. See Trial Tr. at 335–37 (518 West 204 LLC); 437–38 (18 Mercer); id. at 514 (ABJ). They attested to having had numerous problems with the devices, which Teman had failed to fix. See, e.g. , id. at 334–35, 339–40, 346 (518 West 204 LLC); id. at 436–47 (18 Mercer); id. at 499–501 (ABJ); see also GX 402 (email from Joseph Soleimani, ABJ representative, to Teman cataloguing issues with GateGuard devices); GX 409C (texts from Soleimani to Teman about same). The evidence showed that Teman had reacted angrily and sometimes explosively to the Customers’ decisions to end their relationships with GateGuard. See, e.g. , GX 417–18 (emails from Teman to Elie Gabay, 518 West 204 LLC representative); GX 403–05 (emails from Teman to Soleimani). His angry communications included threats to, among other things, sue the Customers, place liens on their buildings, and refer the Customers to law enforcement. See, e.g. , Trial Tr. at 347, 350–52, 354–55 (518 West 204 LLC); id. at 440 (18 Mercer); id. at 512–13, 561 (ABJ); see also GX 406–08 (emails from Teman to Soleimani threatening lawsuits, liens, and foreclosure).6

The evidence further showed that, as GateGuard lost such business, Teman was facing financial trouble. See Trial Tr. at 807–08; see also GX 704 (texts from Teman to his attorney, Ariel Reinitz, Esq.) ("I'm more concerned about getting the cash since we need to operate ... we'll survive, but it's not great. [W]e run so tight."). Looking for options, he consulted his attorney, Reinitz, about the possibility of withdrawing funds directly from the Customers’ accounts, purportedly in accordance with the Payment Terms, to fulfill unpaid invoices. Trial Tr. at 770–72. Teman envisioned using remotely created checks ("RCCs") to withdraw funds to pay the business's debts.7 See id. Teman, however, did not show Reinitz the RCCs he planned to deposit. See id. at 793–94. Reinitz was not aware of how much the Customers had paid for their devices, see id. at 813, 912–13, nor was there any evidence that Teman had told Reinitz the amount he was planning to charge them in purported fees via the RCCs. Teman did not, for example, disclose to Reinitz that the first two checks that he would create and deposit would be for $18,000 each. See id. at 823 (Reinitz explaining that he first learned about the two $18,000 March checks in April 2, 2019 messages from Teman, after the deposits had taken place).

Although Reinitz testified that he orally told Teman that depositing RCCs drawn on the Customers’ accounts was "technically legal," and that the Payment Terms gave Teman "explicit authority" to do so, id. at 921, he did not memorialize that purported advice, and there was no documentary support of any kind that any such communication had occurred. Reinitz's written communications with Teman reflected the opposite guidance. On January 2, 2019, in a series of WhatsApp messages responding to Teman's proposal to draw checks on Customers’ accounts, Reinitz wrote, flatly, "No" and "[b]ad idea." GX 702 at 1. In the same string of messages, Reinitz further wrote to Teman that the Customers "are likely to call police. And you will be arrested. And have a criminal case...

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