United States v. Zemlyansky
| Decision Date | 05 November 2018 |
| Docket Number | Docket No. 16-409,August Term 2017 |
| Citation | 908 F.3d 1 |
| Parties | UNITED STATES of America, Appellee, v. Mikhail ZEMLYANSKY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
Joshua Naftalis, Assistant United States Attorney (Daniel Goldman, Daniel Noble, Margaret Garnett, Assistant United States Attorneys, on the brief) for Geoffrey S. Berman, United States Attorney for the Southern District of New York, New York, NY, for Appellee.
Jerald Brainin, Los Angeles, CA, for Defendant-Appellant.
Before: Jacobs, Cabranes, and Wesley, Circuit Judges.
Twice—in 2013 and 2015—the Government tried defendant-appellant Mikhail Zemlyansky for his alleged involvement in criminal activity. The first jury did not convict him, but the second jury did. On appeal, Zemlyansky argues that the second conviction amounted to double jeopardy, because the Government secured the conviction by proving an issue the first jury had already decided in his favor. We are asked to decide whether the issue-preclusion component of the Double Jeopardy Clause prohibits the Government from predicating a Racketeer Influenced and Corrupt Organizations Act ("RICO") conspiracy charge on acts mirroring the defendant’s earlier substantive and conspiracy acquittals. We conclude it does not. We also reject Zemlyansky’s other arguments regarding constitutional error in his second trial. Accordingly, the judgment is AFFIRMED .
Zemlyansky was involved in several criminal schemes from before 2007 until his first indictment in 2013. These schemes included Lyons Ward; the Rockford Group; the Illegal Gambling Ring; and the No-Fault Insurance Organization.
In 2007, Zemlyansky started a fraudulent investment firm, "Lyons, Ward & Associates." The firm purported to invest in insurance-settlement claims, and it received almost $7 million from investors by guaranteeing them an 18% yearly return. But their money was never invested; instead, it was embezzled and then laundered through shell companies. To perpetuate the scheme, Zemlyansky issued false account statements and small interest payment checks to investors.
In 2009, Zemlyansky started "Rockford Funding Group LLP." Like Lyons Ward, the Rockford Group was built on falsehoods and ultimately garnered approximately $10 million in investments. The proceeds from the two securities fraud schemes were wired to and from shell companies located in the United States and overseas.
Around the time Zemlyansky ran the Lyons Ward and Rockford Group securities fraud schemes, he also operated an illegal, high-stakes poker ring in Brooklyn, New York.
Between 2009 and February 2012, Zemlyansky and his co-defendant Michael Danilovich owned and controlled medical professional corporations ("P.C.s"). These P.C.s fraudulently billed insurance companies for millions of dollars under New York’s No-Fault Comprehensive Motor Vehicle Insurance Reparations Act, N.Y. Ins. Law § 5101 et seq.
Under the No-Fault Act, individuals injured in car accidents assign their statutory benefits to licensed medical professionals, who submit claims for medically "necessary" treatments directly to the injured party’s insurance carriers. See id. § 5102; N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.11 (providing for assignment). Zemlyansky and Danilovich, who were not medical professionals, owned and controlled more than ten P.C.s in Brooklyn. The claims the P.C.s submitted to insurance companies were misleading, both because they often were for unnecessary treatments and because they represented that medical professionals owned and controlled the P.C.s. Zemlyansky and Danilovich profited from insurance payments, fee-sharing arrangements, and kickbacks for referrals. They collected their profits from this no-fault insurance scheme, in part, through a series of wire transfers to and from shell companies overseas.
In May 2013, a federal grand jury returned the Superseding Indictment S13 ("S13 Indictment," or "first indictment"), charging Zemlyansky, Danilovich, and others with nine counts relating to the No-Fault Insurance Organization. The S13 Indictment did not include allegations relating to the Lyons Ward or Rockford Group securities fraud schemes, or to the Illegal Gambling Ring.
Count One of the S13 Indictment charged Zemlyansky with conspiring to participate in the affairs of a RICO enterprise, 18 U.S.C. § 1962(d). The charged racketeering enterprise was the No-Fault Insurance Organization, and the pattern of racketeering consisted of mail fraud, 18 U.S.C. § 1341, and money laundering, id. §§ 1956–57.
The S13 Indictment also charged Zemlyansky with eight counts that mirrored the RICO conspiracy’s predicate offenses: conspiracy to commit healthcare fraud, 18 U.S.C. § 1347, 1349 (Count Two); substantive healthcare fraud, id. §§ 2, 1347 (Count Three); conspiracy to commit mail fraud, id. § 1349 (Count Four); mail fraud, id. §§ 2, 1341, 1349 (Count Five); conspiracy to commit money laundering, id. §§ 1956(h), 1957 (Count Six); and substantive money laundering, id. §§ 1956–57 (Counts Seven, Eight, and Nine).
On November 13, 2013, after a trial that lasted eight weeks, the jury acquitted Zemlyansky of the non-RICO conspiracy and substantive counts, Counts Two through Nine. The jury was unable to reach a verdict with respect to the RICO conspiracy count, Count One. The District Court declared a mistrial on that Count.
Following the mistrial, a grand jury in 2015 returned the Superseding Indictment S18 ("S18 Indictment," or "second indictment") against Zemlyansky and others. The S18 Indictment contained six counts. Count One charged Zemlyansky with conspiring to violate RICO as a member of an expanded enterprise: the "Zemlyansky/Danilovich Organization." Like the racketeering enterprise alleged in the first indictment, the Zemlyansky/Danilovich Organization encompassed conduct relating to the No-Fault Insurance Organization. But the Zemlyansky/Danilovich Organization also encompassed conduct relating to Lyons Ward, the Rockford Group, and the Illegal Gambling Ring.
The S18 Indictment also charged Zemlyansky with five substantive counts relating to Lyons Ward. Those charges were: conspiracy to commit securities fraud, 18 U.S.C. § 371, 15 U.S.C. § 78j(b) (Count Two); substantive securities fraud, 15 U.S.C. §§ 78j(b), 78ff, 17 C.F.R. § 240.10b–5 (Count Three); conspiracy to commit mail and wire fraud, 18 U.S.C. §§ 1341, 1349 (Count Four); mail fraud, id. § 1341 (Count Five); and wire fraud, id. §§ 1343, 1349 (Count Six).
Zemlyansky moved to dismiss the RICO conspiracy count (Count One) and to preclude the Government from offering evidence of his involvement in the No-Fault Insurance Organization to prove that Count. He argued that under the issue-preclusion component of the Double Jeopardy Clause, the Government could not offer evidence of the insurance-fraud-related crimes of which he had been acquitted to prove the new RICO conspiracy charge. The District Court initially denied Zemlyansky’s motion. United States v. Zemlyansky , No. 12-CR-171-1 (JPO), 2016 WL 111444 (S.D.N.Y. Jan. 11, 2016). Ultimately, however, it granted the motion in part, precluding the Government from arguing Zemlyansky was guilty of insurance fraud, while allowing "evidence of Mr. Zemlyansky’s involvement in the alleged no-fault scheme insofar as such conduct [went] to his alleged guilt on the RICO conspiracy charge." Joint App. 358.
Two occurrences at Zemlyansky’s second trial are the focus of his other challenges on appeal: the prosecution’s comments in summation and the introduction of an audio-recording transcript. First, during rebuttal summation, the prosecution mentioned to the jury that Zemlyansky had cried during the testimony of a government witness. The District Court ordered the Government to "move on" and later issued a curative instruction. Joint App. 549–50. The District Court subsequently denied Zemlyansky’s motion for either a mistrial or to reopen the proceedings to allow defense counsel to present an alternative explanation of Zemlyansky’s demeanor. Second, the District Court admitted, over Zemlyansky’s objection and subject to a limiting instruction, a government-prepared transcript that identified Zemlyansky as the declarant in an incriminating audio recording. The District Court further allowed the jury to use the transcript as an aid during deliberations.
After a month-long trial, the jury convicted Zemlyansky of all six counts. The special verdict form reflected the jury’s determination that Zemlyansky was liable for all five of the RICO conspiracy count’s predicate acts.
The District Court denied Zemlyansky’s motion for a new trial and sentenced him principally to 180 months' imprisonment and three years' supervised release. It also ordered him to forfeit $29,575,846 and to pay restitution of $27,741,579.67. Zemlyansky timely appealed his conviction and sentence.2
On appeal, Zemlyansky renews his argument that his conviction of the RICO conspiracy count charged in the second indictment violated his Fifth Amendment right to be free from double jeopardy. He also maintains that the prosecution’s rebuttal summation comments on his courtroom demeanor violated his Fifth and Sixth Amendment rights against self-incrimination, to adverse witness confrontation and conflict-free counsel, and to a fair trial. He further argues that the District Court’s evidentiary ruling admitting the transcript violated his Sixth Amendment right to a fair trial. These errors, Zemlyansky urges, amount to cumulative error.
The Double Jeopardy Clause protects individuals from being "twice put in jeopardy of life or limb" "for the same offence." U.S. Const. amend. V. "[O]nce a defendant is...
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