Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

UNITED STATES v. BAILIN

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION


January 22, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
ROBERT H. BAILIN, et al., Defendants.

The opinion of the court was delivered by: WILLIAM T. HART

MEMORANDUM OPINION AND ORDER

 This case presently involves 10 defendants charged in approximately 80 counts. The offenses all concern trading of yen futures at the Chicago Mercantile Exchange. Four defendants are charged with a conspiracy in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. ยง 1962(d), but all 10 defendants as well as others who have previously pleaded guilty to charges are named as co-conspirators. *fn1" Two of the defendants are each charged with one count of a substantive violation of RICO. There are also charges of mail fraud and wire fraud, and various violations of the Commodity Exchange Act ("CEA"). Trial on the remaining counts is set for February 8, 1993. *fn2" Presently pending are a number of motions of the government and defendants.

 Following a lengthy trial on almost 200 counts, a jury returned verdicts of not guilty on approximately two-thirds of those counts and hung on the counts that remain to be tried. In an order dated June 26, 1991, it was held that double jeopardy did not bar the retrial of any of the remaining counts, but that the government was estopped from again seeking to prove any of the acquitted counts constituted RICO predicate acts. One defendant and the government appealed and the Seventh Circuit affirmed. United States v. Bailin, 977 F.2d 270 (7th Cir. 1992) ("Bailin"). Still unresolved is the question of whether evidence of the acts charged in the acquitted counts can be presented by the government at the second trial. See id. at 282 & n.19. The government contends that such evidence is admissible as proof of the RICO conspiracy, proof of a scheme to defraud, or as other acts evidence under Fed. R. Evid. 404(b). In its motion for a pretrial ruling to admit certain evidence, the government summarizes the evidence of acquitted counts and other presently uncharged transactions that it intends to present at trial. *fn3"

  The first issue to be addressed is the argument that the government is precluded from prosecuting the remaining counts. Count 2 of the indictment describes defendants' alleged scheme to defraud. These allegations are incorporated into all the mail and wire fraud counts of the indictment. *fn4" It is contended that the jury's finding of not guilty on Count 2 constitutes a finding that the alleged scheme to defraud does not exist and therefore bars further prosecution of the remaining counts. *fn5" All the mail and wire fraud counts incorporate the same scheme to defraud. Count 2, however, alleges that particular conduct involving a particular transaction constituted mail fraud by defendant Sidel that was part of the scheme to defraud. A finding of not guilty on Count 2 did not have to be based on a finding that the overall scheme to defraud did not exist; it could have been based on a finding that another element of mail fraud was missing for that particular mailing. See Bailin, 977 F.2d at 281-82. Therefore, the not guilty verdict on Count 2 is not a sufficient basis for applying double jeopardy or estoppel to dismiss the remaining counts against Greenfield or the remaining mail and wire fraud charges against the other defendants.

 In Dowling v. United States, 493 U.S. 342, 110 S. Ct. 668, 107 L. Ed. 2d 708 (1990), the Supreme Court clarified the standard for applying collateral estoppel in a criminal trial following a prior acquittal in a separate trial or separate case. The Supreme Court clarified that the issue sought to be precluded in the second trial must be an ultimate fact for the second trial, not merely an evidentiary fact. Id. at 672. For collateral estoppel to apply, it must be shown by the party invoking the doctrine that (1) the two trials involve identical issues; (2) the evidence to be precluded was an ultimate fact necessarily decided in the first trial; and (3) the evidence is also an ultimate fact in the second trial. Bailin, 977 F.2d at 280-81. An ultimate fact is a fact that must be proven beyond a reasonable doubt. Id. at 280 (citing Note, Collateral Estoppel Effect of Prior Acquittals, 46 Brooklyn L. Rev. 781, [790 & n.45] (1980)). "Ultimate facts are those facts so crucial to a proceeding that in reaching a final judgment the trier of fact must necessarily have determined their truth or falsity. By contrast, facts introduced for their cumulative value, but which are not required to be proved in order to support a final judgment, are deemed evidentiary or mediate in nature." 46 Brooklyn L. Rev. at 784.

 The government presents three grounds for admitting acquitted evidence. The government contends the various transactions involved are all part of the conspiracy and therefore evidence related to the acquitted counts is direct evidence of the existence of the conspiracy charged against four of the defendants in Count 1. It also contends that the transactions are direct evidence of the scheme to defraud that is charged as part of the mail fraud and wire fraud counts. The government further contends that the evidence is admissible as other bad acts evidence to show intent, plan, or knowledge with respect to individual CEA counts. See Fed. R. Evid. 404(b).

 Defendants argue that admitting this evidence as direct evidence would be use for proof of an ultimate fact. Count 1 charges four defendants with conspiring to commit "racketeering activity consisting of multiple acts of mail fraud in violation of the federal mail fraud statute . . . and wire fraud in violation of the federal wire fraud statute . . ., as more fully described in the indictment, which counts are incorporated by reference." At the first trial, the jury was instructed: "To prove a 'pattern of racketeering activity' as alleged in Count 1, the government must prove agreement to commit at least two racketeering acts, as charged in the indictment . . . ." Instruction 42. It was also instructed: "In relation to element four, 'a pattern of racketeering activity' in Count 1, in order to find a defendant guilty, you must unanimously agree that the defendant agreed that one or more of the alleged conspirators would commit at least two particular charged racketeering acts in furtherance of the conspiracy." Instruction 43. Defendants contend that proof of the acquitted counts (at least the acquitted mail and wire fraud counts) would be proof of an ultimate fact since the government must prove an agreement to commit at least two charged racketeering acts. In the retrial, however, the jury will be provided with a redacted indictment. The jury will again be instructed *fn6" that it must find an agreement to commit two racketeering acts charged in the indictment. The acquitted counts will no longer be charged in the indictment so they cannot be the racketeering acts referred to in the indictment and instructions. Instead, to the extent evidence of acquitted counts is permitted to be presented at the retrial as direct evidence, it will be cumulative proof supporting that a conspiratorial agreement or a scheme to defraud exists. It is the conspiratorial agreement itself or the scheme to defraud itself that is the ultimate fact that must be proven beyond a reasonable doubt, not the individual transactions that were charged in the acquitted counts. Since not evidence of ultimate facts, evidence of the acquitted counts is not evidence that the government is estopped from presenting in the retrial.

 Even if the government were estopped from presenting the acquitted evidence as direct evidence, it would not be estopped from using the evidence as 404(b) evidence. Dowling, 110 S. Ct. at 672-73, is controlling on that point and defendants do not contend otherwise. Some defendants contend that intent was not an issue they raised as a defense and therefore there is no purpose that would justify admitting the evidence under 404(b). While the emphasis of each closing argument varied from defendant to defendant, no defendant conceded that he had the necessary mental state to support all the charges against him. The government has the burden of proving beyond a reasonable doubt the necessary mental state for each remaining count. To the extent it is less of an issue for some counts, that would be weighed in the balance in determining whether particular 404(b) evidence should be admitted. There is, however, no defendant for whom state of mind is a nonexistent issue.

 For the reasons stated, the government is not estopped from presenting evidence of the acquitted counts. That, however, does not fully resolve the question of whether the government will be permitted to present the evidence at the second trial. Admission of the evidence still must be found to be appropriate in accordance with Fed. R. Evid. 403 and/or 404(b). At the first trial, it was found that the large number of charges involved and the volume of evidence already available as to charged transactions strongly militated against admitting evidence of uncharged transactions except on a limited basis where the evidence was important to the government's case. It is within this court's discretion to exclude cumulative evidence. See Fed. R. Evid. 403.

 This case still involves approximately 80 charged counts involving 40 or more separate transactions. In its motion, the government recites a number of uncharged transactions that were admitted at the first trial. Defendants do not specifically object to admission of evidence related to transactions that were never the basis of any charge and this evidence may be offered. Even without the admission of evidence related to the acquitted counts, there is still substantial evidence on which the government can rely. In its description of the evidence related to acquitted counts, the government does not specifically point out how any evidence is particularly pertinent to the remaining counts. The government, for example, does not argue that, as to any specific defendant, there is limited evidence as to intent or joinder in the conspiracy *fn7" absent admission of the acquitted evidence. There is also no argument that any of the acquitted evidence is particularly illuminating or essential in any particular way to the government's case. Nevertheless, evidence of transactions that were the basis of the 50 acquitted counts *fn8" described in the government's motion will be admitted.

 As the case stands, the government's only contention is that the acquitted evidence bears on the existence of a conspiracy or the existence of a scheme to defraud. As such, it is also contended that some or all of the additional evidence would be examples supporting the state of mind elements of the various counts. Given the large amount of evidence involving numerous transactions that will otherwise be presented in this case, presenting all of the examples of allegedly illegal transactions may not be essential to the government's case and may unnecessarily prolong this very long case. *fn9" Whether the acquitted evidence should be kept out as needlessly cumulative is a close question. It, however, is not found that the acquittal evidence should be kept out as cumulative. Still, the government should reconsider whether all the acquitted and uncharged evidence is essential to its case and consider paring down its presentation to only that evidence which is most illuminating or necessary to its case.

 If the government proves the commission of any particular transaction for which a defendant has already been acquitted, defendant Baker requests that the jury be informed of the prior acquittal. Baker cites appellate court opinions that refer to the trial court giving such an instruction, but does not cite any case that addresses the legal issue of whether a defendant is entitled to such an instruction. Other cases, however, hold that such an instruction should not be given. United States v. Jones, 808 F.2d 561, 566-67 (7th Cir. 1986), cert. denied, 481 U.S. 1006, 107 S. Ct. 1630, 95 L. Ed. 2d 203 (1987); United States v. Viserto, 596 F.2d 531, 536-37 (2d Cir.), cert. denied, 444 U.S. 841, 62 L. Ed. 2d 52, 100 S. Ct. 80 (1979). See also Prince v. Lockhart, 971 F.2d 118, 122 (8th Cir. 1882); United States v. Giovanelli, 945 F.2d 479, 486-89 (2d Cir. 1991). It is unlikely that such an instruction would be necessary in the present case. To the extent any testimony from the first trial is used for impeachment or some other appropriate purpose, no reference will be made to a prior trial of these defendants. The first trial will simply be referred to as a "proceeding." *fn10"

 The government also moves for admission of evidence related to the obstruction of justice charges against defendant Wright. At the first trial, this court found that the admission of such evidence (which was arguably equivocal) would be unduly prejudicial, particularly to the other defendants who are alleged to have conspired with Wright, but against whom there are no allegations of obstruction. At the first trial, evidence as to the allegedly obstructive conduct was presented without any advance notice and was later stricken. At the retrial, the government will not be permitted to present this evidence.

 The government moves in limine to limit defendant Baker's cross-examination of Brian Sledz regarding his investments in a liquor store. The government has contended that Sledz paid Baker with cash and checks for Baker's share of profits from illegal trading activity. There is a $ 60,000 check from Sledz to Baker with the notation liquor store. The government does not dispute Baker's right to cross-examine on the issue of whether payments from Sledz to Baker were related to the liquor store, not illegal trading activity. It contends, however, that the cross-examination at the first trial strayed well beyond this point. Baker is certainly entitled to cross-examine on this issue and some background as to the liquor store is fair cross-examination. Baker's questioning should be directed toward the purpose of showing what the $ 60,000 payment was for. Baker is directed to so limit his cross-examination.

 The government moves for disclosure by defendant Baker of evidence concerning a defense based on mental disease or defect. Prior to the first trial, Baker disclosed that he might introduce evidence regarding alcohol consumption and his mental state during some of the conduct alleged in the indictment. It was stated that this might include expert testimony. Such testimony, however, was not used at the first trial and no defense based on alcoholism or alcohol consumption was argued to the jury. Defendant Baker has again informed the government that such a defense might be presented at the second trial. Discovery under Rule 16 is very limited in scope. Discovery from the defendant is limited to books, papers, documents, photographs, tangible objects, and reports of examinations and tests. Fed. R. Crim. P. 16(b). The government is only entitled to documents and tangible evidence, it cannot request that Baker answer interrogatories about his defense or provide a list of witnesses. United States v. Peters, 937 F.2d 1422, 1424-25 (9th Cir. 1991). cf. United States v. Shue, 766 F.2d 1122, 1135 (7th Cir. 1985), cert. denied, 484 U.S. 956, 98 L. Ed. 2d 376, 108 S. Ct. 351 (1987); United States v. Alex, 791 F. Supp. 723, 729 (N.D. Ill. 1992). Baker does not object to complying with Rule 16, but declines revealing such information until shortly before such testimony is presented. Just as with practices regarding the revelation of Jencks Act material to defendants, the government should not expect to receive particulars as to defense witnesses until shortly before they are to testify. See United States v. Pulvirenti, 408 F. Supp. 12, 14 (E.D. Mich. 1976). Waiting until later to reveal the documents is particularly appropriate where, as here, defendant Baker may again decide not to present the defense. Defendant Baker is to make the required disclosures sufficiently in advance of testimony so as not to delay the trial.

 Defendants Smith and Marren have moved to renew previously filed motions and to adopt motions of codefendants. Defendant Baker has also moved to renew his motions. This court has previously entered an order that, where there is no indication to the contrary, the motion of a particular defendant will be treated as being brought on behalf of all defendants for whom the issue raised would apply. That order continues to apply. In today's order and future orders, reference to a defendant bringing a particular motion is only for the purpose of identifying the motion. The motion should be understood as applying to any defendant against whom there are charges involving the same issues. All evidentiary rulings from the first trial shall continue to apply except to the extent that further rulings are made that are expressly or implicitly inconsistent with the prior rulings. It is the obligation of the parties to bring to the court's attention any prior rulings on the same evidence or issues.

 Defendant Baker has moved for the production of exculpatory evidence. FBI agent Volk is a key witness of the government who went undercover to pose as a trader in the yen pit. Baker points to numerous computational errors that Volk made during his trading activity. Baker requests that the government reveal any information it may have as to Volk having a disability or infirmity that could have contributed to making such errors. Without expressly stating that no such evidence exists, the government responds that it is well aware of its obligations under Brady v. Maryland, 373 U.S. 83, 10 L. Ed. 2d 215, 83 S. Ct. 1194 (1963). The court understands this to be a representation that the government has no such information. If, on the other hand, the government meant that it has such information, but that it need not be disclosed to the defendants, within five days the government shall file a brief not to exceed five pages explaining why it need not disclose such information.

 Defendant Baker's motion regarding the designation of tape recordings is denied without prejudice based on the government's representation that it will provide such a designation by January 31, 1993.

 Defendant Baker has moved for the presentation of a revised Santiago proffer in light of the evidence to be presented at the second trial. See generally United States v. Santiago, 582 F.2d 1128 (7th Cir. 1978); United States v. Rodriguez, 975 F.2d 404, 405-06 (7th Cir. 1992). As the government points out, this court found the Santiago proffer for the first trial to be sufficient and also held, in ruling on a posttrial motion, that sufficient evidence remained to support the existence of a conspiracy. See June 26, 1991 Order at 6-7. For these reasons, presentation of a revised Santiago proffer would be unnecessary. The court already has sufficient information from which it can make the preliminary determination that there is sufficient evidence to support the existence of a conspiracy. Cf. United States v. Cox, 923 F.2d 519, 526 (7th Cir. 1991) (there are a variety of methods by which a court may make the preliminary determination of the existence of a conspiracy). Also, the jury was not instructed at the first trial that it could treat any statements as co-conspirator admissions and it is assumed that the same will be true of the second trial. A preliminary determination of the existence of a conspiracy, however, is still necessary for a determination that there is a foundation to prove the acts of all ten defendants relevant to showing the existence of a conspiracy. See Fed. R. Evid. 104(a). It is found that a sufficient basis exists for the government to seek to prove the existence of a conspiracy involving all defendants.

 Defendants Baker, O'Malley, and Sidel move for severance of the wash sale counts, Counts 140, 359, 362, 366, and 367. These counts involved transactions between traders; they do not involve trading on behalf of a customer. The indictment does not specifically charge that these transactions are part of the conspiracy. At the first trial, however, the government argued that these transactions were part of the scheme. Such a use is permissible. This court previously held that these counts could be joined in the indictment, see July 17, 1990 Order at 5-6, and no reason is found to change that determination in light of evidence presented at the first trial and the reduced number of counts for the second trial. These counts may properly be joined under Rule 8. See United States v. Koen, 982 F.2d 1101 (7th Cir. 1992). Also, defendants are not prejudiced such that severance should be granted under Rule 14. Cf. September 21, 1990 Order at 5.

 Defendant Greenfield represents that he is going to adopt the defense that the allegedly improper trading was standard practice at the Chicago Mercantile Exchange and condoned by officials of the Exchange and the Commodity Futures Trading Commission. Defendants Cali and Pace adopted such a defense at the first trial, and Greenfield objected to their presence at trial. Although Cali's and Pace's defense was not mutually antagonistic with the defenses of the other defendants, see September 21, 1990 Order at 1-3, the charges against those two defendants were eventually severed from the trial when it became evident that the other defendants would be unduly prejudiced. See October 22, 1990 Order at 1-3. Greenfield and Baker have moved for severance of the charges against Greenfield based on the inconsistencies between Greenfield's defense and the defenses of the other 9 remaining defendants. The government contends that Greenfield has not adequately set forth facts or law in support of his defense to permit the court to presently consider it to be a basis for severance. The court agrees. No legal or factual support has been advanced to support such a defense by Greenfield.

 IT IS THEREFORE ORDERED that:

 (1) Government's (a) motion for a pretrial ruling to admit certain evidence [#1098] is granted in part and denied in part; (b) motion in limine [#1096] is granted in part and denied in part; and (c) motion for disclosure of information relevant to defendant Baker's evidence concerning mental disease or defect [#1124] is granted in part and denied in part.

 (2) Defendant Greenfield's (a) motion seeking an order of dismissal as to his three counts [#1083] is denied and (b) motion to sever [#1082] is denied.

 (3) Motion of defendants Smith and Marren to renew pretrial motions previously filed and to adopt motions of codefendants [#1091] is granted in part and denied in part.

 (4) Defendant Baker's (a) motion to renew motions in limine previously granted by the court [#1085] is granted in part and denied in part; (b) motion for production of exculpatory evidence [#1086] is denied without prejudice; (c) motion for designation of tape recordings to be offered at trial [#1087] is denied without prejudice as moot; (d) motion for revised Santiago proffer [#1088] is denied; (e) motion to sever Counts 359, 362, 366, and 367 of superseding indictment [#1089) is denied; and (f) motion for severance from Michael Greenfield is denied.

 (5) Defendant O'Malley's motion for severance of Count 366 [#1099] is denied.

 (6) Defendant Sidel's motion for severance of Counts 140, 359, 362, and 367 pursuant to Federal Rules of Criminal Procedure [#1095] is denied.

 ENTER:

 William T. Hart

 UNITED STATES DISTRICT JUDGE

 Dated: JANUARY 22, 1993


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.