164. Multi-defendant Odometer Fraud Prosecution

FN1. XXXXXX alone is charged in Count 20, which alleges a willful failure to retain specified records; each defendant is charged in all other counts, except that defendant XXXXX in not charged in counts 2-3 or 29.

FN2. All substantive offenses also charge the defendants violated 18 U.S.C. § 2, the aiding and abetting statute.

-Defendants caused the odometers on 18 specified vehicles to be unlawfully altered, in violation of 15 U.S.C. §§ 1984 and 1990c, and 18 U.S.C. § 2 (Counts 2-19).

-XXXXXXX failed to retain records as required by 15 U.S.C. §§ 1984 and 1990c, and 18 U.S.C. § 2 (Count 20).

-Defendants provided false odometer disclosure statements to purchasers of the cars they sold, in violation of 15 U.S.C. §§ 1984 and 1990c, and 18 U.S.C. § 2 (Counts 21-25).

-Defendants devised a mail fraud scheme, and caused the mails to be used in defrauding purchasers of used cars, in violation of 18 U.S.C. §§ 1341 and 2 (Counts 26-30).

-Defendants caused the interstate transportation of forged and altered securities, specifically, automobile title documents bearing false mileage claims that were transported to California, which was defendant XXXXXXXXXX's home base during the conspiracy, in violation of 18 U.S.C. §§ 2314 and 2 (Counts 31-35).

FN3. In addition, all defendants have made discovery requests of the United States pursuant to Fed. R. Crim. P. 16. The United States intends to provide defendants with the discovery materials to which they are entitled.

1. Severance: XXXXXXXX, XXXXXX, XXXXXXXXXX.

2. Dismissal of Counts 1 and 20-35: XXXXXX.

3. Continuance: XXXXXXX, XXXXXXX, XXXXXXXX, XXXXXXXXXX.

4.Extension of time for filing further motions: all defendants.

5. Rule 12(d) designation of evidence: XXXXXXXX, XXXXXXXXXX.

6. Adopt co-defendant motions: XXXXXXX, XXXXXXX,XXXXXXXX, XXXXXXXXXX.

A. THE DEFENDANTS ARE PROPERLY JOINED AND THEIR MOTIONS FOR SEVERANCE SHOULD BE DENIED.

1. Defendants Are Properly Joined Under Rule 8.

Defendant XXXXXX claims that the offenses are improperly joined under Fed. R. Crim. P. 8(a), and that the defendants are improperly joined under Fed. R. Crim. P. 8(b). In a case as this, with a common illegal conspiracy at the core of all of the substantive charges, joinder of the charges and the defendants is proper.

Rule 8 is "to be broadly construed in favor of initial joinder." United States v. Piaget, 915 F.2d 138, 142 (5th Cir. 1990). See also United States v. Lueben, 812 F.2d 179, 187 (5th Cir.), vacated in part on other grounds, 816 F.2d 1032 (5th Cir. 1987); United States v. Chagra, 754 F.2d 1186, 1188 (5th Cir.), cert. denied, 474 U.S. 922 (1985). "The propriety of joinder under Rule 8 is determined by the initial allegations of the indictment, which are accepted as true absent arguments of prosecutorial misconduct." United States v. Harrelson, 754 F.2d 1153, 1176 (5th Cir. 1985).

Joinder of the offenses charged is proper under Rule 8(a), which states:

Fed. R. Crim. P. 8(a). When substantive offenses are within the scope of a conspiracy, joinder of all of the charges in the same indictment is proper. See Lueben, 812 F.2d at 187.

The offenses charged in this Indictment were all part of the same scheme centered around defendant XXXXXXX's wholesale used car business. The purpose of the scheme was to roll back the odometers of used cars and to make money by selling them to other car dealers at fraudulently inflated prices. Each of the substantive offenses (the actual rollbacks, the failure to retain records, the falsification of odometer statements, the use of the mails, and the interstate transportation of forged and altered ownership documents) was an important step in accomplishing this purpose.

The substantive counts and the conspiracy charged in the Indictment are, on their face, based on "two or more acts or transactions connected together or constituting parts of a common scheme or plan." See e.g., United States v. Fagan, 821 F.2d 1002, 1006-07 (5th Cir. 1987) (witness intimidation charge properly joined with mail fraud charges where witness intimidation was an effort to conceal the mail fraud), cert. denied, 484 U.S. 1005 (1988); Lueben, 812 F.2d at 187 (joinder of counts charging false statements to federally insured financial institutions with conspiracy and aiding and abetting proper); Unites States v. Davis, 752 F.2d 963, 971-72 (5th Cir. 1985) (joinder of obstruction of justice count with various fraud charges proper where obstruction was part of scheme to avoid prosecution for those charges).

Joinder of the five defendants in this Indictment is similarly proper under rule 8(b).

Fed. R. Crim. P. 8(b). This Indictment charges each defendant with playing an important role in the successful sale of cars with rolled back odometers to other dealers at a profit. Defendant XXXXXXX purchased vehicles appropriate for rollbacks; XXXXXX performed the actual rollbacks; XXXXXXXX performed necessary alterations of ownership documents; and XXXXXXXXXX provided a buyer for many of the rolled back vehicles. All of these activities were directed by XXXXXXX.

Whether each defendant participated in the purchase, rollback, and sale of every vehicle charged in the Indictment is irrelevant. "The fact that each count does not name all defendants and that different combinations of co-conspirators participated in different transactions . . . does not prevent all of the transactions from being part of the same series of transactions for the purposes of joinder." United States v. Merida, 765 F.2d 1205, 1218 (5th Cir. 1985). The Fifth Circuit has repeatedly approved of the joinder of multiple defendants in indictments charging conspiracies with complexity equal to or greater than that in this case. See e.g., United States v. Williams, 809 F.2d 1072, 1085-86 (5th Cir.) (complex drug and money laundering conspiracy), cert. denied, 484 U.S. 896 (1987); Merida, 765 F.2d at 1218-19 (drug conspiracy involving "a single enterprise directed and controlled by a core managerial team, not unlike a large corporation with several divisions"); United States v. Michel, 588 F.2d 986 (5th Cir.), cert. denied, 444 U.S. 825 (1979) (large, diffuse marijuana importation conspiracy).

Accordingly, defendant's arguments based on misjoinder are meritless and must be rejected.

2. There Are No Grounds for Severance Under Rule 14.

Defendants XXXXXXXX, XXXXXX, and XXXXXXXXXX claim for a variety of reasons that they are prejudiced by the joinder of defendants and charges in this case, and have moved for a severance under Rule 14. All of their claims are speculative and unfounded, as discussed below.

"It is the general rule that persons who are indicted together should be tried together." Harrelson, 754 F.2d at 1174. In order to obtain a severance under Fed. R. Crim. P. 14, a defendant must show "compelling prejudice," Piaget, 915 F.2d 138, 142 (quoting Harrelson, 754 F.2d at 1174, quoting United States v. Crawford, 581 F.2d 489, 491 (5th Cir. 1978)), and that he would be "unable to obtain a fair trial without a severance," Harrelson, 754 F.2d at 1174. Any potential prejudice must be balanced against the public's interest in judicial efficiency and economy. See Id. at 1176; United States v. Scott, 795 F.2d 1245, 1250 (5th Cir. 1986). The defendants' severance motions simply do not make the necessary showing.

i. Rule 14 Severance

Defendants XXXXXXXXXX and XXXXXXXX each desire a severance under Rule 14 because they maintain that other co-defendants would give exculpatory testimony at their trials if tried separately. By their own admission, however, XXXXXXXX and XXXXXXXXXX cannot at this time show with any certainty that these co-defendants would in fact testify at a separate trial, or demonstrate the nature of the purported exculpatory testimony.[FN4] Indeed, they do not even identify which co-defendants would testify. Because of the speculative nature of these claims, they should be denied.

To obtain a severance based on a need to use co-defendant testimony, a defendant must show a bona fide need for the testimony, the substance of that testimony, its exculpatory nature, and that the co-defendant would in fact testify at a separate trial. See United States v. Duzac, 622 F.2d 911, 912 (5th Cir.), cert. denied, 449 U.S. 102 (1980); United States v. Rice, 550 F.2d 1364, 1369 (5th Cir.), cert. denied, 434 U.S. 954 (1977). If the defendant makes such a threshold showing, the court must: Duzac, 622 F.2d at 912.

Severance under Rule 14 is not appropriate to make co-defendant testimony available if claims about that testimony are speculative. Williams, 809 F.2d at 1084. See also United States v. Morrow, 537 F.2d 120, 135 (5th Cir. 1976), cert. denied, 430 U.S. 956 (1977). In particular, the movant must show with some "reasonable certainty that the proposed witnesses would, in fact, testify." Rice, 550 F.2d at 1370. XXXXXXXXXX and XXXXXXXX have made none of the required showings, so their motions should be denied.

ii. Bruton Claims

XXXXXXXXXX and XXXXXXXX also move for a severance under Bruton v. United States, 391 U.S. 123 (1968). In Bruton, the Supreme Court held that a defendant's rights under the Confrontation Clause are violated when the defendant is incriminated by a co-defendant's confession admitted at a joint trial. These motions are explicitly contingent on introduction of such a confession. See ¶ VI of each motion. There is no reason to believe that any confession will be introduced against any defendant who will in fact stand trial in this case, which confession would implicate another defendant who will also stand trial. A severance on these grounds is therefore not required at this time.

b.Defendant XXXXXX's Severance Motion Should Be Denied.

Defendant XXXXXX has moved for a severance claiming that the cumulative nature of the evidence pertaining to the various counts and defendants will prejudice the jury's ability to make findings of guilt on an individual, count-by-count basis, and because he desires to testify in his own defense as to Counts 21-35, but not as to Counts 1-19.[FN5] Both grounds are without merit.

The cumulative nature of the evidence and the risk of "spill-over" justifies a severance only in the most extreme cases. The movant must make a compelling showing that a joint trial would result in prejudice, and that a cautionary instruction at the joint trial would not cure that prejudice. Piaget, 915 F.2d at 142; Scott, 795 F.2d at 1250; Harrelson, 754 F.2d at 1174. Indeed, a cautionary instruction is the preferred remedy for dealing with the risk of cumulative evidence: Morrow, 537 F.2d at 136.

There is nothing extraordinary or "compelling" about the joinder of offenses or defendants in this case. Joint trials are the rule rather than the norm in multi-count, multi-defendant conspiracy cases, see Scott, 795 F.2d at 1250, and XXXXXX has pointed to no justification why the additional effort and expense of a separate trial are necessary in this case.

XXXXXX's request for a severance based on his desire to testify as to certain counts but not others is also unsupported. A defendant seeking a severance of charges on these grounds must demonstrate "that he has both important testimony to give concerning one count and strong need to refrain from testifying on the other." Alvarez v. Wainwright, 607 F.2d 683, 686 (5th Cir. 1979) (quoting Baker v. United States, 401 F.2d 958, 977 (D.C. Cir. 1968), cert. denied, 400 U.S. 965 (1970)). See also United States v. Forrest, 623 F.2d 1107, 1115 (5th Cir.), cert. denied, 449 U.S. 924 (1980). The showing must provide sufficient detail about the nature of the movant's testimony to allow the court to determine "that the claim of prejudice is genuine and to enable it intelligently to weigh the considerations of 'economy and expedition in judicial administration' against the defendant's interest in having a free choice with respect to testifying." Alvarez, 607 F.2d at 686 (quoting Baker, 401 F.2d at 977).

Here, XXXXXX's "bare allegation that he want[s] to testify with respect to one count but not with respect to the other[s]," is an inadequate basis for a severance. Forrest, 623 F.2d at 1115. His motion should therefore be denied.

Defendant XXXXXX has moved to dismiss Counts 1 and 20-35[FN6] of the Indictment claiming that conduct associated with odometer tampering schemes can only be prosecuted under specific statutes dealing with odometer tampering, and not under fraud statutes of more general applicability. On the contrary, the crimes charged in Counts 1 and 20-35 are all distinct crimes supported by distinct allegations. XXXXXX's motion must be denied because it lacks legal foundation. 1.Mail Fraud and Other Substantive Crimes of Fraud Can Be Charged in One Indictment.

The mail fraud statute and other fraud statutes have long been recognized as creating separate crimes where separate elements are required. In Pereira v. United States, 347 U.S. 1 (1954), for example, the Court held that 18 U.S.C. §§ 1341 and 2314 constitute separate crimes and a person can be convicted of both "even though the charges arise from a single act or series of acts, so long as each requires the proof of a fact not essential to the other." Id. at 9. Similarly, in Edwards v. United States, 312 U.S. 473 (1941), the Court upheld the Securities Act of 1933 and mail fraud convictions despite the defendant's argument that the Securities Act made it unlawful to use the mails to defraud in the sale of securities. The Court rejected a "repeal by implication" analysis. It held: "We see no basis for a conclusion that Congress intended to repeal the earlier statute. The two can exist and be useful, side by side." Id. at 484.

2. Statutes With General Prohibitions Are Not Generally Viewed as Repealed by Implication When More Focused Statutes Are Passed.

The Fifth Circuit has held that there is a presumption against implicit repeal, and that a more specific statute repeals by implication a more general statute only if

United States v. Cavada, 821 F.2d 1046, 1048 (5th Cir.) (quoting United States v. Batchelder, 442 U.S. 114, 122 (1981)), cert. denied, 484 U.S. 932 (1987). A defendant may be prosecuted under either or both of two overlapping statutes when "[e]ach statute is aimed at a slightly different form of misconduct." United States v. Anderez, 661 F.2d 404, 407 (5th Cir. 1981).[FN7] 3.Mail Fraud and Odometer Rollback Are Different Offenses.

It is well established that the mail fraud statutes may be violated by certain types of odometer rollback schemes, see United States v. Shyrock, 537 F.2d 207 (5th Cir. 1976), cert. denied, 429 U.S. 1100 (1977), and that mail fraud and odometer tampering are distinct crimes, see United States v. Oldfield, 859 F.2d 392 (6th Cir. 1988). In Schmuck v. United States, 489 U.S. 705 (1989), the Supreme Court held that a defendant charged with mail fraud was not entitled to a lesser included offense instruction on odometer tampering. Examining the elements of both crimes, the Court concluded that

Id. at 721-22.

In Oldfield, the Sixth Circuit was faced with virtually the same argument XXXXXX raises here. The defendant had engaged in an odometer tampering scheme that included use of the mails, and was prosecuted for mail fraud under 18 U.S.C. § 1341. He claimed that he should have been prosecuted instead under the odometer tampering statutes, which at the time made odometer tampering only a misdemeanor. Oldfield cited the rule of lenity. He also argued that, in passing the odometer statutes, Congress intended to limit the prosecution of offenses related to odometer tampering to those statutes. The court rejected his arguments. The court held that odometer tampering and mail fraud were distinct crimes with different elements, and could be applied to the same course of conduct, even though the result was to impose a penalty greater than that provided in the odometer statute:

859 F.2d at 398.[FN8] 4.Transporting Altered Titles Interstate Violates 18 U.S.C. § 2314.

In Moskal v. United States, 111 S. Ct. 461 (1990), the Supreme Court engaged in analysis similar to that above in holding that 18 U.S.C. § 2314 applied to certain types of odometer rollback schemes. Moskal had been convicted of violating section 2314 as a result of his participation in an odometer rollback scheme that involved sending altered titles from Pennsylvania to Virginia. He argued under the rule of lenity that the statute should not be applied to his conduct. The Court found that section 2314 was not ambiguous and did in fact apply to Moskal's conduct:

Id. at 465 (quoting Bifulco v. United States, 447 U.S. 381, 387 (1980) (citations omitted) (emphasis in original). The Court went on to note that "'title washing' operations are a perfect example of the 'further frauds' that Congress sought to halt in enacting § 2314." Id. at 466.[FN9] 5.Each Group of Counts in the Instant Indictment Charges Separate Offenses.

The offenses charged in the instant Indictment properly charge separate offenses under the principles enunciated in these cases. Each of the substantive offenses charged in the counts XXXXXX desires dismissed has distinct elements, and is supported by factual allegations different from the elements of the actual rollback charges. The conduct charged in Count 20 involved XXXXXXX's failure to keep odometer statements; Counts 21 through 25 involve the falsification of the mileage figures on odometer statements provided to the purchasers of motor vehicles; Counts 26 through 30 allege the use of the mails in furthering the scheme to defraud; and Counts 31 through 35 charge the transportation of forged and altered ownership documents from Texas to a buyer in California.[FN10]

Although each of the substantive offenses was an important step in defendants' odometer rollback scheme, each offense charges a "different form of misconduct." Anderez 661 F.2d at 407. As in Oldfield, every occurrence of odometer tampering "was not automatically an occurrence" of one of the other offenses. XXXXXX has failed to point to any Congressional intent that the odometer tampering laws are to apply to the exclusion of the other statutes charged, and has fallen woefully short of showing any "positive repugnancy between the provisions" in question. Cavada, 821 F.2d at 1048 (footnote omitted).

XXXXXX's attempt to apply Busic v. United States, 446 U.S. 398 (1980), to this case is groundless. In Busic, the defendant was convicted of assaulting a federal officer with a dangerous weapon and of having used a firearm during the commission of a felony. In effect, the defendant was punished twice for precisely the same action: using a gun during an assault on a federal officer. The Court held that absent some contrary showing of Congressional intent, two statutes could not be employed in that fashion to punish precisely the same conduct. Id. at 405-10. In the instant case, the issue whether Congress intended different statutes to apply to the same conduct never arises: different statutes are being applied to different conduct.

Odometer tampering, although at the core of defendants' scheme, was only a part of their entire course of illegal conduct. The Indictment properly charges separate violations for separate acts, and XXXXXX's motion to dismiss should therefore be denied.

Defendants XXXXXXX, XXXXXXX, XXXXXXXX, and XXXXXXXXXX have moved for a continuance. None of the defendants are in custody, and all have waived their right to a speedy trial.[FN11] Thus, their interest in a speedy trial has been satisfied. However, the Fifth Circuit has noted that the Speedy Trial Act protects not only individual defendants, but the interest of the public in speedy disposition of criminal cases, and that the Act permits continuances only on the basis of specific recorded findings. United States v. Kington, 875 F.2d 1091, 1107 (5th Cir. 1989) (citing 18 U.S.C. § 3161(h)(8)). In this case, the facts warrant granting the requested continuance, due to the complexity of the case, the volume of the evidence involved,[FN12] and the need for defense counsel to familiarize themselves not only with the facts of this case, but with the application of the statutes involved. Defendants XXXXXXXX's and XXXXXXXXXX's moving papers speak most directly to the complexity of this case and the need for additional time for the defense to adequately prepare.[FN13] In addition, the United States has in its possession certain video and audio tapes which will be made available to one or more of the defendants. Review of these tapes may also be time consuming for the defendants.

In order to ensure that there will be no question as to the adequacy of the Court's findings under § 3161(h)(8), the United States has attached proposed "FINDINGS AND ORDER OF EXCLUDABLE PERIOD UNDER SPEEDY TRIAL ACT" Civil Resource Manual at 165 for the Court's consideration.[FN14]

All defendants have requested the Court to allow them to file additional pretrial motions. These motions should be denied.

In general, defendants justified their requests on the ground that pretrial discovery has not yet been provided. However, the relief sought is an open-ended extension of the time for filing of motions. Providing that relief would allow defendants to file at a later date motions which could and should have been filed on July 2 had counsel acted diligently. In order to preserve the integrity of the scheduling order, defendants should be required to file additional motions only upon an application to the Court in which they justify their failure to comply with the July 2, 1991, motion date. If grounds for allowing the filing of additional motions exist, they can be simply stated. Defendants' request for a carte blanche to file additional motions of any nature whatsoever should be denied.

Defendants XXXXXXXX and XXXXXXXXXX have moved for an order requiring the United States to designate the evidence it will use in its case-in-chief that is discoverable under Fed. R. Crim. P. 16. The United States will inform defendants when it makes discovery available to them of the evidence provided that is then intended for use in our case-in-chief. This will afford the opportunity to seek the Court's leave to file a motion to suppress, as contemplated by Rule 12(d)(2). Defendants XXXXXXX, XXXXXXX, XXXXXXXX, and XXXXXXXXXX have moved for an order adopting the motions of co-defendants. Defendants XXXXXXX and XXXXXXX limit their requests to motions "as the same may relate to the Defendant," and except from their requests motions for continuance and speedy trial waivers. Defendants XXXXXXXX and XXXXXXXXXX ask to adopt "each and every motion filed by the co-defendants" in this case, but reserve "the right to object to any motion not intended to be adopted or incorporated by this motion." This latter exception appears inconsistent with the "each and every motion" request.

Because it is totally unclear from the defendants' requests which motions they do and do not wish to incorporate,[FN15] the United States opposes their motions. The United States would not oppose a motion by any defendant to join in any particular motion, specifically identified, filed by another defendant. The Court and the United States should not be required to guess which motions are "intended" to be adopted, or which motions are viewed as "relating" to a defendant who did not file the motion.

CONCLUSION

The motions for severance and dismissal of counts should be denied. The motions for a continuance should be granted, and the Court should enter appropriate findings under the Speedy Trial Act. A proposed set of findings and order is submitted herewith. The motions for a blanket extension of the time for filing motions should be denied. The motions seeking identification of evidence to be used at trial should be declared moot in light of the United States' intent to provide the information sought. The motions to adopt unspecified co-defendant motions should be denied.

Dated: July 11, 1991 Respectfully submitted,

Ronald G. Woods United States Attorney

By:

EDWARD F. GALLAGHER, III Assistant United States Attorney

KENNETH L. JOST Attorney

LEON F. SZEPTYCKI Attorney

Office of Consumer Litigation U.S. Department of Justice Room 6104 Todd Building 550 11th Street, N.W. Washington, D.C. 20004 (202) 307-0048

[cited in USAM 4-8.310]