charge wire fraud, on grounds that the indictment does not allege sufficient facts to support a charge of wire fraud. Specifically, defendants claim that there can be no charge of fraud because there is no allegation that they violated any duty of disclosure, or made any affirmative misrepresentation, to UFCW. The Government's position is that the defendants' interpretation of the term "fraud" limiting it to the concept of "deception" is too narrow.
As the Supreme Court has stated, "'to defraud' commonly refer[s] 'to wronging one in his property rights by dishonest methods or schemes,' and 'usually signifies the deprivation of something of value by trick, deceit, chicane or overreaching.'" McNally v. United States, 483 U.S. 350, 97 L. Ed. 2d 292, 107 S. Ct. 2875 (1987) (quoting Hammerschmidt v. United States, 265 U.S. 182, 188, 68 L. Ed. 968, 44 S. Ct. 511 (1924)) (internal citation omitted). A person may commit a fraud upon a person or entity without making an actual misrepresentation to that party or without breaching a specific duty to that party. The allegations here include that (1) the defendants created shell corporations to receive funds, specifically forming multiple corporations in order to avoid suspicion by Union officials if a number of large loans were made to a single entity; (2) the defendants kicked-back payments to Coleman, the one and only officer of the Union who knew about and authorized the "loans"; (3) the former co-defendant Coleman falsely introduced defendant Arnone to the president of the Union as someone working in the health care retirement business rather than the building business; (4) the defendants made token repayments on the "loans" to delay the Union from discovering the fraud.
As the Court stated in its September 20, 1996 opinion, "the government need not reveal to the defendants the precise manner in which it intends to prove its case." United States v. Coleman, 940 F. Supp. 15, 19 (D.D.C. 1996). The allegations in the indictment are more than sufficient to support the wire fraud counts.
Therefore, defendants' motion to dismiss Counts 1-20 is denied.
2. Motion to Dismiss on grounds of alleged government misconduct
Defendants also move to dismiss the indictment because they allege the government has engaged in misconduct. Specifically, they allege the government improperly used its power over the co-defendants Coleman and Gjerset to force them to make "insulating" statements that could be used for impeachment purposes at trial. The basis of the allegation is that the government did not seek such statements as conditions of Coleman's and Gjerset's pleas until it learned that the remaining defendants wished to call them as witnesses at trial. The Court rejects this contention. The government was clearly within its authority to seek a full briefing from Coleman and Gjerset as a condition of their pleas. This is a common and proper practice. Of course, if Coleman and Gjerset testify in a manner that is consistent with the information they provided to the government, there will be nothing for the government to impeach.
Defendants further allege that the government abused its power by improperly using the grand jury to bring Gjerset's parents before it after Gjerset and Coleman plead. The record shows that the grand jury testimony of Gjerset's parents was elicited while the government was seeking the superseding indictment against the defendants in this case. There is no evidence that the government abused its power in seeking the Gjersets' testimony. The grand jury had a proper purpose, and indeed a superseding indictment did result from its work.
The defendants have made no showing of misconduct on the part of the government. Accordingly, the defendants motion to dismiss the indictment on grounds of government misconduct is denied.
An appropriate order is attached to this Memorandum Opinion.
United States District Judge
This matter is before the Court on Defendants' motions to: (1) Dismiss Counts 1-20 of the [Superseding] Indictment; and (2) Dismiss the superseding indictment on grounds of alleged government misconduct. For the reasons stated in the attached Memorandum Opinion, it is hereby
ORDERED that Defendants' Motion to Dismiss Counts 1-20 of the [Superseding] Indictment be DENIED ; and it is further
ORDERED that Defendants' Motion to Dismiss the superseding indictment on grounds of alleged government misconduct be DENIED.
United States District Judge