United States v. Zemlyansky
| Decision Date | 11 January 2016 |
| Docket Number | 12-CR-171-1 (JPO) |
| Parties | UNITED STATES OF AMERICA v. MIKHAIL ZEMLYANSKY, Defendant. |
| Court | U.S. District Court — Southern District of New York |
On March 19, 2015, following a jury trial, Mikhail Zemlyansky was convicted of participating in a racketeering conspiracy and committing and conspiring to commit securities, mail, and wire fraud. (Dkt. No. 1539.) Zemlyansky moves for a new trial pursuant to Rule 33 of the Federal Rules of Criminal Procedure. For the reasons that follow, the motion is denied.
On January 28, 2014, a grand jury returned a superseding indictment (S18) charging Zemlyansky with six counts. Count One charged Zemlyansky with participating in a racketeering conspiracy involving a criminal enterprise that engaged in securities, wire, and mail fraud relating to a no-fault insurance scheme, investment schemes, money laundering, and illegal gambling. (Dkt. No. 1057.) Counts Two through Six charged Zemlyansky with committing and conspiring to commit mail, wire, and securities fraud arising out of a scheme to defraud investors through a scam investment firm called Lyons Ward and Associates ("Lyons Ward"). The Indictment identified the Lyons Ward investment scheme as a predicate act of securities fraud for the racketeering conspiracy charged in Count One. (Dkt. No. 1057 at 2.)
On January 23, 2015, the Government filed a motion in limine seeking to admit evidence that Zemlyansky participated in two additional investment fraud schemes: one involving an LLC called Rockford Funding Group ("Rockford Group"), and one involving a corporation called Baron & Caplan Association ("Baron & Caplan"). The Government argued that Zemlyansky's participation in the two additional schemes provided evidence of the racketeering enterprise and its mail, wire, and securities fraud predicates. (Dkt. No. 1825 ("Gov't Mot.") at 1-2.) The Court granted the Government's motion on February 9, 2015.
Zemlyansky's trial began on February 23, 2015 and concluded on March 19, 2015. At trial, the Government presented evidence that Zemlyansky engaged, inter alia, in the Lyons Ward and Rockford Group investment frauds. The Lyons Ward fraud involved cold-calling potential investors to solicit investments in the fraudulent company, which purported to invest in "settlement claim funding." (Id. at 8.) Cold-callers promised investors a fixed return rate of up to 18 percent per year. (Id.) Rather than investing the money they received, however, Zemlyansky and his co-conspirators worked with money launderers to funnel that money into overseas bank accounts, primarily in Latvia, and then to wire it back to shell companies in New York. (Id. at 7-8, 10, 13.) The Government argued that Zemlyansky and his co-conspirators ran the Lyons Ward scheme and recruited a "paper owner" to file Articles of Incorporation with the New York Department of State, open a bank account, and sign a lease for office space. (Id. at 8, 10.) Approximately 80 individuals invested a total of nearly $7 million in Lyons Ward between 2007 and 2009. (Id. at 8.)
The Rockford Group scheme was similar to the Lyons Ward scheme. (Id. at 12.) Like Lyons Ward, the Rockford Group purported to be engaged in settlement funding, but was in fact a sham company. (Id. at 12.) At trial, a witness named Igor Katsman testified that he hadlaundered more than $1 million for Zemlyansky and his co-conspirator, Michael Danilovich, as part of the Rockford Group scheme. (Id. at 13.) Katsman testified that he had laundered $3.5 million in total for both investment schemes. (Id.)
The evidence against Zemlyansky also included testimony from William Shternfeld, who solicited victims for the Lyons Ward scheme, and Elaine Morgan, who worked in the building where the Lyons Ward office was located. (Id. at 7.) Shternfeld testified that he participated in the Lyons Ward scheme until November 2008 and that a man called "Gino" asked him to solicit investors for the Rockford Group scheme in the spring of 2009. (Id. at 10, 12-13.) Morgan testified that she had seen Zemlyansky enter the office building where she worked. (Id. at 7.) The Government also introduced evidence from Lyons Ward victims, documents pertaining to Lyons Ward, and an audio recording between a special agent with the Alabama Securities Commission and an individual named "Bob Hamilton." (Id.) In the recording, Bob Hamilton told the agent that Lyons Ward was a legitimate investment company. The Government argued at trial that Bob Hamilton was, in fact, Zemlyansky. Three witnesses—Shternfeld, Katsman, and Liya Albanese, an individual who had worked for Zemlyansky—testified that they recognized Bob Hamilton's voice as that of Zemlyansky. (Id. at 11 (citing Dkt. Nos. 1585-89 ("Trial Tr.") at 1341-42, 1545-46, 1785-87, 2208-10).)
The jury returned a verdict of guilty on all six counts on March 19, 2015. (Dkt. No. 1539.) On a special verdict form, the jury determined that all of the five predicate acts for Count One—mail fraud, wire fraud, money laundering, securities fraud, and illegal gambling—were proven beyond a reasonable doubt. (Id.) The jury also determined that the two sub-predicate acts—health care fraud and investment fraud—were proven beyond a reasonable doubt. (Id.)
This motion concerns a separate investigation into the Rockford Group scheme in the Eastern District of New York. Prior to 2012, the U.S. Attorney's Office for the Eastern District of New York conducted a joint investigation with other government agencies (the "EDNY Investigation") into the Rockford Group scheme and another investment scheme involving a corporation called Grayson Hewitt. (Id. at 14.) The EDNY investigation led to the prosecution of three individuals: Ruslan Rapaport, Peter Liounis, and Genadi Yagodayev.1
Rapaport was charged with money laundering and conspiracy to commit wire fraud on April 17, 2012. (Id. at 15.) The Complaint alleged that, using the alias "Alex James," Rapaport set up an answering service for the Grayson Hewitt scheme and participated in both the Rockford Group scheme and another fraudulent scheme, a bogus General Motors IPO offering by UBS Bank (the "IPO Scheme"). (Id.) Rapaport left the United States on a flight to Russia on January 19, 2012 and has not returned to this country. (Id. at 16 n.7.)
Liounis was charged with wire fraud on April 17, 2012. (Id. at 14.) The Complaint alleged that Liounis participated in the Grayson Hewitt scheme, the IPO scheme, and the Rockford Group scheme. (Id. at 14-15.) It identified Liounis as a cold-caller who attempted to solicit at least one victim in connection with the Rockford Group scheme. (Id.) Liounis was arrested on April 18, 2012; he thereafter provided a post-arrest statement. (Id. at 16.) On October 24, 2013, the Government moved to dismiss all charges against Liounis related to the Rockford Group and IPO schemes, leaving only the counts related to the Grayson Hewittscheme. (Id.) After a jury trial from January 27, 2015 to February 5, 2014, Liounis was convicted on all remaining counts. He was sentenced to 292 months' imprisonment on August 22, 2014. (Id. at 18-19.)
Yagodayev was charged with wire fraud based on his involvement in the Rockford Group scheme on December 8, 2010. (Id. at 19.) The Complaint alleged that he set up an answering service, registered a bogus website, filed Articles of Incorporation, hired an assistant, and rented an office space for the Rockford Group. He was indicted on four counts on May 2, 2014. (Id. at 20.) Yagodayev pleaded guilty to one count of conspiracy to commit mail and wire fraud on May 1, 2015. (Id.) In his plea allocution, he admitted that he received money to be the paper owner of the Rockford Group. (Id.) Yagodayev was sentenced to sixty months' imprisonment and three years of supervised release on December 3, 2015. United States v. Yagodayev, No. 14-cr-0258, Dkt. No. 37 (E.D.N.Y. Dec. 3, 2015).
Zemlyansky argues that the Government "knowingly concealed and suppressed that the [EDNY USAO] had conducted its own comprehensive investigation of the Rockford Group." (Dkt. No. 1756 ("Def.'s Mot.") at 2.) He contends that "the EDNY investigation generated in excess of 65,000 pages of discoverable documents underlying the Rockford Group," which the Government had a statutory and constitutional duty to disclose to Zemlyansky before trial. (Id.)
Pursuant to Rule 33 of the Federal Rules of Criminal Procedure, upon a motion by a defendant, a district court may "vacate any judgment and grant a new trial if the interest of justice so requires." Fed. R. Crim. P. 33(a). Before ordering a new trial, a district court must find that there is "a real concern that an innocent person may have been convicted." United States v. Bell, 584 F.3d 478, 483 (2d Cir. 2009) (quoting United States v. Sanchez, 969 F.2d1409, 1414 (2d Cir. 1992)). To grant a Rule 33 motion, the court must determine that "it would be a manifest injustice to let the guilty verdict stand." Sanchez, 969 F.2d at 1414. In light of this standard, "Rule 33 motions are granted 'only in extraordinary circumstances.'" United States v. Bout, No. 08-cr-365, 2015 WL 6459177, at *2 (S.D.N.Y. Oct. 26, 2015) (citing United States v. McCourty, 562 F.3d 458, 475 (2d Cir. 2009)).
The defendant bears the burden of proving that he is entitled to a new trial. McCourty, 562 F.3d at 475. Where a Rule 33 motion is filed more than fourteen days after a verdict, the motion must be based on "newly discovered evidence." Fed. R. Crim. P. 33(b). "Relief under Rule 33 based on newly discovered evidence may be granted only upon a showing that: (1) the evidence [was] newly discovered after trial; (2) facts are alleged from which the court can infer due diligence on the part of the movant to obtain the evidence; (3) the evidence is material; (4) the evidence is not merely cumulative or impeaching; and (5)...
To continue reading
Request your trial