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United States v. Rangaraju

United States District Court, Sixth Circuit

September 23, 2013



BENITA Y. PEARSON, District Judge.

The Court must decide whether the Double Jeopardy Clause of the United States Constitution prohibits the Government from prosecuting a criminal defendant on counts of wire fraud and conspiracy to commit wire fraud. The issue is submitted to the Court upon Defendant Jeeva Rangaraju's motion to dismiss the Superseding Indictment. ECF No. 226.[1] The Court has reviewed the motion, the Government's opposition, ECF No. 228, Defendant's reply, ECF No. 229, the trial record and the controlling law. The Court also permitted additional argument at the final pretrial hearing. For the reasons provided below, the Court grants Defendant's motion and dismisses the Superseding Indictment in its entirety.

I. Factual Background

A. First Indictment

On December 14, 2011, a federal grand jury returned an Indictment charging Defendant and his co-defendants, Craig Robinson and Mahesh Saraswathy, with one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349, and twenty-two counts of wire fraud in violation of 18 U.S.C. §§ 1343 and 2. See ECF No. 1. The Indictment alleged that the three defendants were officers of Allied Solutions Group, Inc., an information technology consulting business. According to the Indictment, Allied entered into a "factoring agreement" with Aquent Financial Services, LLC, whereby Allied sold its accounts receivable to Aquent for a percentage of their value, generating an immediate cash flow for Allied. Count 1 of the Indictment alleged that the defendants conspired to obtain excessive payments from Aquent by creating false invoices and submitting those invoices to Aquent for advance payment pursuant to the factoring agreement. The Indictment alleged that, as part of the scheme, the defendants caused Allied to send Aquent fictitious bank records with inflated balances in order to create the appearance that Allied had genuine accounts receivable, to send Aquent fraudulent financial statements that falsely overstated the revenues of Allied, and to induce Aquent to continue purchasing Allied invoices. Counts 2 through 23 each charged the three defendants with the substantive offense of wire fraud. Each substantive count alleged that the defendants devised a scheme to defraud Aquent by false pretenses. Counts 2 through 12 alleged eleven specific wire transmissions to Aquent containing false invoices. Counts 13 through 23 alleged that the defendants "caused" Aquent to transmit eleven specific electronic transmissions of money in payment for the false invoices described in Counts 2 through 12.

Prior to trial, Robinson and Saraswathy pleaded guilty pursuant to separate plea agreements. They each pleaded guilty to the conspiracy count, Count 1, and several of the substantive wire fraud counts-but they specifically admitted to the conduct contained in all of the substantive wire fraud counts. See ECF Nos. 93 at 17; 95 at 17. Defendant pleaded not guilty.

Following an eleven-day trial, which included approximately two days of deliberation, the jury returned a general verdict of acquittal on Counts 2 through 23. ECF No. 213 at 26-37. The jury failed to return a unanimous verdict with respect to Count 1. ECF No. 213 at 26. Defendant moved for a mistrial as to the hung count. ECF No. 213 at 42. After noting the length in which the jury deliberated, the complexity of the trial, "several indications that the jurors were at an impasse and could go no further, " and the issuance of the Allen charge, [2] the Court declared that "manifest necessity" dictated the declaration of a mistrial as to Count 1. ECF No. 213 at 43.

B. Superseding Indictment

On March 12, 2013, a federal grand jury returned a Superseding Indictment against Defendant only. See ECF No. 194. Count 1 charges Defendant with conspiracy to commit wire fraud and is virtually identical to the conspiracy count in the original Indictment. Counts 2 through 7 charge Defendant with six new (previously uncharged) substantive counts of wire fraud. The substantive wire fraud counts in the original Indictment described the transmission of false invoices and the corresponding transmission of funds in payment for those invoices. While the substantive counts in the Superseding Indictment allege different transmissions (not invoice or money transmissions) the scheme to defraud is the same as the scheme alleged in the original Indictment.

In particular, Count 2 of the Superseding Indictment alleges that Defendant transmitted, as part of the scheme to defraud Aquent, an email pressuring Aquent for continued funding and promising to provide financial information that Aquent had been requesting. Count 3 alleges that Defendant created fraudulent Allied financial statements and emailed these documents in order to conceal and continue the scheme. Count 4 alleges that Defendant created fraudulent financial statements and transmitted, caused to be transmitted, or aided and abetted the transmission of a fax containing the financial statements to Aquent. Count 5 alleges that Defendant emailed Aquent and made false representations about Allied's bank accounts and ability to make payments. Count 6 alleges that Defendant emailed a fictitious letter purportedly drafted by Barclays Bank to a purported Allied customer, Hamilton Valves, regarding a stop payment order. Count 7 alleges that Defendant emailed Aquent and made false representations regarding Allied's and its purported customers' bank accounts and their ability to make payments to Aquent.

Significantly, evidence of the transmissions described in the new substantive wire fraud counts were presented by the Government during Defendant's trial as proof of his participation in the scheme to defraud Aquent. See Government Exhibits 183 (corresponding with Count 2); 190 (Count 3); 99 and 100 (Count 4); 193 (Count 5); 197 (Count 6); and 199 (Count 7).

C. Motion to Dismiss

Defendant now moves to dismiss the Superseding Indictment on the ground that the Government's prosecution is barred by the Double Jeopardy Clause of the United States Constitution. ECF No. 226. Specifically, Defendant asserts that the principle of collateral estoppel, or issue preclusion, bars prosecution in the present case because a fact necessary to the Government's case, namely, that Defendant was a participant in the scheme to defraud Aquent, was necessarily decided in his favor by the jury verdicts of acquittal. The Government opposes the motion and argues that (1) it is permitted under the law to reprosecute a criminal defendant on a mistried count; (2) it may try Defendant on the new substantive wire fraud counts because "each use of the wires constitutes a separate crime under" the wire fraud statute; and (3) Defendant fails to show that the jury found that he was not involved in the scheme to defraud. ECF No. 228.

II. Governing Legal Principles

The Double Jeopardy Clause of the Fifth Amendment to the United States Constitution provides that no person shall "be subject for the same offence to be twice put in jeopardy of life or limb...." U.S. CONST. amend. V. The Clause protects "two vitally important" interests. Yeager v. United States, 557 U.S. 110, 117, 129 S.Ct. 2360, 174 L.Ed.2d 78 (2009). First, it is well-recognized that "the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in an continuing state of anxiety and insecurity, as well as enhancing the possibility that even though innocent he may be found guilty." Id. at 117-118 ( quoting Green v. United States, 355 U.S. 184, 187-188, 78 S.Ct. 221, 2 L.Ed.2d 199 (1957)). Second, our system also possesses an interest in preserving the finality of judgments. Id. at 118.

The first interest is implicated whenever the State seeks a second trial after its first attempt results in a mistrial. Yeager, 557 U.S. at 118. In such an event, the Clause does not prevent the Government from seeking to reprosecute because the "interest in giving the prosecution one complete opportunity to convict those who have violated its laws' justifies treating the jury's inability to reach a verdict as a nonevent that does not bar retrial." Id. ( quoting Arizona v. Washington, 434 U.S. 497, 509, 98 S.Ct. 824, 54 L.Ed.2d 717 (1978). When, however, a factual issue was necessarily decided by a jury's acquittal in a prior trial, the interest in preserving the finality of a jury's judgment bars a retrial of that issue. See id. at 118-119. This form of preclusion is known as collateral estoppel, meaning "when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit." Ashe v. Swenson, 397 U.S. 436, 443, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970).

In determining whether the doctrine of collateral estoppel applies, courts should "examine the record of a prior proceeding, taking into account the pleadings, evidence, charge, and other relevant matter, and conclude whether a rational jury could have grounded its verdict upon an issue other than that which the defendant seeks to foreclose from consideration." Ashe, 397 U.S. at 444. Crucially, it is now settled that courts may not consider the fact that a jury hung on a particular count as indicative of any aspect of the jury's determination in the collateral estoppel analysis. Yeager, 557 U.S. at 117, 122. As explained by the Supreme Court, "[b]ecause a jury speaks only through it verdict, its failure to reach a verdict cannot-by negative implication-yield a piece of information that helps put together the trial puzzle." Id. at 121.

A criminal defendant carries the burden "to demonstrate that the issue whose relitigation he seeks to foreclose was actually decided in the first proceeding." Dowling v. United States, 493 U.S. 342, 350, 110 S.Ct. 668, 107 L.Ed.2d 708 (1990). Furthermore, that a jury found a fact in the defendant's favor must be shown with "definite assurance" and "clear evidence." United States v. Benton , 852 F.2d 1456, 1466 (6th Cir.), cert. denied, 488 U.S. 993 , 109 S.Ct. 555, 102 L.Ed.2d 582 (1988). The Sixth Circuit has recognized "that when a jury acquits on some counts in a multicount indictment, principles of collateral estoppel may preclude retrial of charges upon which the jury was unable to agree at the earlier trial." United States v. Frazier , 880 F.2d 878, 883 (6th Cir. 1989), cert. denied, 493 U.S. 1083 , 110 S.Ct. 1142, 107 L.Ed.2d 1046 (1990).

III. Discussion

The fact that the jury hung on the conspiracy count of the original Indictment "has no place in the issue preclusion analysis." Yeager, 557 U.S. at 122. The Court must, therefore, cabin its analysis to the jury's verdicts of ...

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