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United States v. Vaulin

United States District Court, N.D. Illinois, Eastern Division

August 4, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
ARTEM VAULIN, Defendant.

          MEMORANDUM OPINION AND ORDER

          John Z. Lee United States District Judge.

         Defendant Artem Vaulin (“Vaulin”) has been indicted along with two co-defendants on various charges stemming from his alleged involvement in operating a BitTorrent website, as well as other related websites. The charges in the indictment comprise criminal copyright infringement under 17 U.S.C. § 506 of the Copyright Act, conspiring to commit criminal copyright infringement under 18 U.S.C. § 371, aiding and abetting criminal copyright infringement under 18 U.S.C. § 2, money laundering under 18 U.S.C. § 1956(a)(2)(A) and § 1956(a)(2)(B)(i), conspiring to commit money laundering under 18 U.S.C. § 1956(h), and aiding and abetting money laundering, again under 18 U.S.C. § 2.

         Vaulin, who is currently in Poland and contesting extradition, has moved to dismiss the indictment. In response, the government argues among other things that, because Vaulin is a fugitive and refuses to appear in this proceeding, the Court should decline to entertain his motion under the fugitive disentitlement doctrine. For the following reasons, the Court finds that the fugitive disentitlement doctrine applies here. Nevertheless, following the path charted by the Seventh Circuit in United States v. Bohhari, 757 F.3d 664 (7th Cir. 2014), and for the sake of judicial efficiency, the Court reviews and denies Vaulin's motion to dismiss [26] on the merits.

         I. Background

         The following allegations are taken from the indictment and accepted as true in evaluating Vaulin's motion to dismiss. United States v. Moore, 563 F.3d 583, 586 (7th Cir. 2009).

         At all times relevant to the indictment, Vaulin and his co-defendants operated Kickass Torrents (“KAT”), “a commercial website that facilitated and promoted the reproduction and distribution of copyrighted content over the Internet without the authorization of the copyright owners.” Indictment, Count 1 ¶¶ 1(b), 1(e), ECF No. 19. KAT solicited, collected, and indexed “torrent files.” Id., Count 1, ¶¶ 1(b), 4, 9. A torrent file contains instructions for identifying other users of the so-called “BitTorrent” network. Id., Count 1, ¶ 1(a). The file further instructs users on how to download copies of media from other users over the Internet using a BitTorrent client, or software. Id. Torrent files, therefore, are not media themselves; they are a means of connecting a user desiring a copy of media with other users willing to distribute. By obtaining torrent files from sites like KAT, users of a BitTorrent network locate one another, and, by use of a BitTorrent client, distribute copies of media or download their own. Id.[1]

         KAT had a large following of users-“[m]illions of members . . . many of whom resided in the United States.” Id., Count 1 ¶ 1(b). KAT's network utilized computer servers throughout the world, including servers located in Chicago. Id., Count 1 ¶ 18. The site “generate[d] millions of dollars from the unlawful reproduction and distribution of copyright-protected media, including movies-some of which were still playing in theaters-television shows, music, video games, computer software, and electronic books.” Id., Count 1 ¶ 3. Vaulin and his co-defendants accomplished this by “soliciting and causing others to solicit extensive online advertising, sales of KAT's visitor traffic, and KAT user donations.” Id., Count 1 ¶ 13.

         As one might surmise from this amount of revenue, the KAT website was quite elaborate. Torrent files were indexed by genre in order to allow KAT users “to easily browse, locate, and obtain their desired infringed copyrighted content.” Id., Count 1 ¶¶ 9-10. To assist in the downloading and distribution process, Vaulin and his co-defendants developed and offered their own BitTorrent client for their users. Id., Count 1 ¶ 19. Users notified one another when new content was available, and the website encouraged and rewarded frequent users with awards and accolades. Id., Count 1 ¶¶ 6, 11. At the same time, Vaulin and his co-defendants instituted a code of conduct that banned users for “uploading torrents that contained malware, promoted other torrent sites, or facilitated the download of ‘banned' content.” Id., Count 1 ¶ 12. There were no sanctions, however, for uploading torrent files for copyright-protected content. Id.

         As a result of KAT's success, Vaulin and his co-defendants received donations from KAT users and made millions from online advertising revenues. Id., Count 1 ¶¶ 7, 13. But, given that KAT facilitated the unauthorized exchange of copyrighted material, they hid these proceeds in bank accounts owned by various shell companies. Id., Count 1 ¶ 14. In addition, they were forced to change KAT's domain name at various times, “in part to avoid and circumvent court orders.” Id., Count 1 ¶ 16. And, in order to hide their operations, Vaulin and his co-defendants housed KAT and related sites under a Ukranian company called “Cryptoneat.” Id., Count 1 ¶ 24.

         In addition to KAT, Vaulin and his co-defendants operated a number of “direct download websites.” Id., Count 1 ¶ 21. These websites, rather than collecting torrent files, made unauthorized copies of copyrighted works directly available for users to download. Id. Vaulin and his co-defendants also hid operation of the direct download websites by way of Cryptoneat. Id., Count 1 ¶ 24.

         Based on these alleged activities, the indictment charges Vaulin and his co-defendants with sixteen counts of criminal conduct. Count 1 charges them with conspiring to violate 17 U.S.C. § 506(a)(1)(A) and § 506(a)(1)(C), two different provisions of the criminal copyright statute.[2] Count 2 charges them with violating and aiding and abetting a violation of 17 U.S.C. § 506(a)(1)(C) in relation to the commercial movie, “The Butler, ” on September 17, 2013. Counts 3 through 12 charge the same, but in relation to ten additional commercial movies over a period spanning June 24, 2016, through July 7, 2016. Lastly, Counts 13 through 16 charge money laundering, conspiracy to commit money laundering, and aiding and abetting money laundering in connection with these infringement activities.

         II. Legal Standard

         Under Rule 7(c)(1), “[t]he indictment or information must be a plain, concise, and definite statement of the essential facts constituting the offense charged.” Fed. R. Crim. P. 7(c)(1). “For each count, the indictment or information must give the official or customary citation of the statute, rule, regulation, or other provision of law that the defendant is alleged to have violated.” Id. An indictment satisfies Rule 7(c)(1) if it “(1) states all the elements of the crime charged; (2) adequately informs the defendant of the nature of the charges so that he may prepare a defense; and (3) allows the defendant to plead the judgment as a bar to any future prosecutions.” United States v. White, 610 F.3d 956, 958 (7th Cir. 2010).

         If an indictment “‘tracks' the words of a statute to state the elements of the crime, ” it generally suffices, and “while there must be enough factual particulars so the defendant is aware of the specific conduct at issue, the presence or absence of any particular fact is not dispositive.” Id. “Indictments are reviewed on a practical basis and in their entirety, rather than ‘in a hypertechnical manner.'” United States v. Smith, 230 F.3d 300, 305 (7th Cir. 2000) (quoting United States v. McNeese, 901 F.2d 585, 602 (7th Cir. 1990)). When doing so, the allegations in the indictment are accepted as true and viewed in a light most favorable to the government. Moore, 563 F.3d at 586; United States v. Yashar, 166 F.3d 873, 880 (7th Cir. 1999).

         III. Analysis

         Vaulin seeks to dismiss the indictment on a number of grounds. But because Vaulin is in Poland and currently resisting extradition to the United States, the Government first asks that the Court deem him to be a fugitive and exercise its discretion to dismiss his motion without prejudice under the fugitive disentitlement doctrine.

         A. Fugitive Disentitlement Doctrine

         The fugitive disentitlement doctrine vests courts with discretion to dismiss a request for relief where “the party seeking relief is a fugitive while the matter is pending.” Degen v. United States, 517 U.S. 820, 824 (1996). The Supreme Court has explained that

[n]o persuasive reason exists why [a court] should proceed to adjudicate the merits of a criminal case after the convicted defendant who has sought review escapes from the restraints placed upon him pursuant to the conviction. While such an escape does not strip the case of its character as an adjudicable case or controversy, we believe it disentitles the defendant to call upon the resources of the [c]ourt for determination of his claims.

Molinaro v. New Jersey, 396 U.S. 365, 366 (1970) (per curiam).

         Three core principles animate the doctrine. First, as a practical matter, it is difficult to enforce a judgment against a fugitive who is, by definition, outside of the court's reach. Degen, 517 U.S. at 824. The Seventh Circuit has likened this principle to “mutuality, ” in that “if [a criminal defendant] wants the United States to be bound by a decision . . . he should be similarly willing to bear the consequences of [that] decision.” In re Hijazi, 589 F.3d 401, 413 (7th Cir. 2009). Second, disentitlement “redress[es] the indignity visited upon the District Court by [a fugitive's] absence from the criminal proceeding, ” essentially denying the fugitive the benefit of unclean hands. Degen, 517 U.S. at 824, 828. And, finally, the doctrine discourages escape and promotes voluntary surrender in order to ensure courts are respected and operate efficiently. Id.

         These principles, however, do not mandate invocation of the doctrine. The Supreme Court, while “acknowledg[ing] disquiet at the spectacle of a criminal defendant reposing [abroad], beyond the reach of our criminal courts, while at the same time mailing papers to the court . . . and expecting them to be honored, ” has indicated that invoking the doctrine to deny all relief is an extreme sanction to be reserved only for those circumstances in which it is warranted. Id. at 828-29.

         While the fugitive disentitlement doctrine originated as a response to appeals of convicted defendants on the run, e.g., Molinaro, 396 U.S. at 366, the Seventh Circuit has suggested that it can apply where a fugitive defendant seeks to dismiss an indictment, e.g., Bokhari, 757 F.3d at 671-73 & n.7; cf. Hijazi, 589 F.3d at 412- 14. In Hijazi, for example, the defendant faced criminal charges in the United States stemming from certain dealings with the U.S. Army and one of its contractors in Kuwait. 589 F.3d at 403. Hijazi voluntarily surrendered to Kuwaiti authorities, but Kuwait refused to extradite him. Id. at 405. Meanwhile, Hijazi filed a motion to dismiss the indictment through attorneys in the United States, arguing in part that the statutes under which he was charged did not apply extraterritorially. Id. The district court held that the fugitive disentitlement doctrine did not directly apply to Hijazi, given that he had not been convicted of a crime, had never even visited the United States, and voluntarily surrendered in Kuwait. Id. at 406. The court nevertheless reasoned that, because Hijazi had little to lose from filing the motion, mutuality concerns undergirding the doctrine required that his motion be denied and declined to enter a ruling on the merits. Id.

         The Seventh Circuit reversed. It began by explaining why a writ of mandamus should issue to direct the district court to rule on Hijazi's motion, observing in part that his motion raised “importan[t] and delica[te]” questions as to the extraterritorial reach of the statutes at issue. Id. at 408-12. Then, addressing the fugitive disentitlement doctrine, the court noted that Hijazi had only set foot in the United States once for reasons unrelated to the case. Id. at 412. Thus, in the court's view, Hijazi “did not flee from the jurisdiction or from any restraints placed upon him.” Id. This, in light of Hijazi's voluntary surrender to Kuwaiti authorities and their ability to extradite him if they so wished, led the court to conclude that the fugitive disentitlement doctrine did not apply. Id. at 412-13. Finally, the court held that the district court had undervalued the adverse consequences that Hijazi would face if he lost the motion to dismiss. Id. at 413. Highlighting the serious risk of extradition he could face if he ventured outside of Kuwait, the court reasoned that there was not such a mutuality deficit that the district court should refrain from deciding his motion. Id. at 413-14. The Seventh Circuit concluded by commenting that, “[o]utside of the core fugitive disentitlement context, the Supreme Court has indicated that disentitlement is ‘too blunt an instrument' to redress the indignity of a defendant's absence.” Id. at 414 (quoting Degen, 517 U.S. at 828).[3]

         While Hijazi identifies circumstances in which a court should be wary of invoking the fugitive disentitlement doctrine, the Seventh Circuit has more recently discussed circumstances in which it may be proper to do so. First, in Bokhari, the defendant faced an eight-count indictment for an illegal scheme he perpetrated while living in the United States. 757 F.3d at 666. He took refuge in Pakistan, where he was also a citizen. Id. The United States requested extradition, but the governments were unable to reach an agreement. Id. at 666-67. United States officials therefore secured a notice through Interpol instructing all member states to arrest Bokhari if he entered their jurisdiction. Id. at 667. And Bokhari, through his attorneys, ...


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